Co-ownership — SQE1 FLK2 Land Law

A man and a woman bought a house together. They were registered as joint proprietors and held the beneficial interest as joint tenants, and neither of them ever did anything to change that. The man later made a will leaving everything he owned to his sister, and told nobody. He died last week.

The woman is still living in the house. The sister has written demanding half of it, saying the will gives her the man's share. How much does the sister get? Nothing. Not because the will is badly drafted, but because by the time it spoke there was nothing left for it to carry.

This is Co-ownership. Keep that sister in mind. We come back to her.

Here is the route. Two layers of ownership first, legal and equitable, because almost every mistake in this topic comes from mixing them. Then the four unities. Then survivorship, and the two ways of holding in equity. Then severance, which is where the marks are. And finally the trusts that give someone a share when their name is nowhere on the title.

Start with the two layers, because they behave differently. At law, a legal estate cannot subsist in an undivided share. That is s.1(6) of the Law of Property Act 1925, and it has a blunt consequence. Co-owners of a legal estate can only ever be joint tenants. There is no such thing as a legal tenancy in common.

There is also a ceiling. Under s.34(2) the maximum number of legal owners is four. Put six friends on a purchase and the first four named take the legal estate, holding it on trust for all six. Which is the point of the whole structure. The legal title is a simple, tidy thing, and everything complicated happens behind it.

Behind it, in equity, the co-owners may hold as joint tenants or as tenants in common, and in whatever proportions they like. So if two people want to own a house sixty forty, they hold the legal estate as joint tenants and the beneficial interest as tenants in common in those shares. Legal joint tenants, equitable tenants in common. That sentence answers a great many questions.

So what makes an equitable joint tenancy? Four unities, and all four must be present. Possession, interest, title and time. Lose any one of them at creation and the parties hold as tenants in common instead.

Unity of possession means each co-owner is entitled to possession of the whole property, not of a defined part. Note that this one is common to both forms of co-ownership, so it is never what distinguishes them. A tenant in common with a small share is still entitled to the whole, and cannot be confined to two rooms.

Unity of interest means the same type and extent of interest, and equal shares. So if one is entitled to 60% and the other to 40%, this unity is gone and they are tenants in common. Unity of title means all acquired through the same instrument, or the same act of law. And unity of time means all acquired at the same moment.

Try one. Two sisters inherit a house from their mother and take it in unequal shares under the will. Same instrument, same moment, both entitled to the whole. Which unity fails? Interest. Unequal shares, so they are tenants in common.

Now the reason any of this matters. The defining incident of a joint tenancy is the right of survivorship. On the death of one joint tenant the interest passes automatically to the survivors by operation of law. It does not pass under the will. It does not pass on intestacy. Nothing falls into the estate at all, and the last survivor ends up owning the lot.

Which is our man and his sister. His will was valid and properly executed, and it disposed of everything he owned. The trouble is that a will speaks only from death, and at that moment survivorship had already carried his interest across to the woman. There was no share left for the will to find.

So hold on to the consequence. A joint tenant cannot leave his interest by will. If he wants somebody else to have it, he must sever in his lifetime, and turn a joint tenancy into a tenancy in common.

A tenancy in common is the other way of holding in equity. Each co-owner has a distinct, identifiable share, which may be equal or unequal. There is no survivorship, so on death the share passes by will or on intestacy. Unity of possession still applies. And each co-owner can mortgage or charge their own share independently of the others.

Before any clever analysis, one question comes first and disposes of most problems. Did the transfer contain an express declaration of how the beneficial interest is held? If it did, that declaration is conclusive. It fixes the shares exhaustively, and can be displaced only if it is set aside or rectified, for fraud or mistake.

So take a woman who put in far more than half the money and paid most of the mortgage for twelve years. If she signed a declaration of a tenancy in common in equal shares, she takes half. Whole course of dealing, contributions, fairness: none of it gets a hearing. That inquiry exists only where there is no declaration.

Now severance, which is where most of the marks in this topic live. Severance converts a joint tenancy into a tenancy in common, and the classic statement of how comes from Williams v Hensman, 1861. Three ways.

First, an act of any one joint tenant operating on their own share. Selling it, mortgaging it, charging it. Second, mutual agreement between the joint tenants. Third, any course of dealing sufficient to show that the parties treated their interests as separate rather than joint.

And on top of those three, the statute adds a fourth. Under s.36(2) of the Law of Property Act 1925, a joint tenant may sever by giving notice in writing to the other joint tenants.

Take the first method carefully, because it is unilateral and it needs no communication at all. A man contracts to sell his beneficial interest, signing a document that sets out all the terms. Three weeks later, before completion, he dies. Severed? Yes, on exchange. It is the contract that severs, not its completion, and he never had to tell his co-owner a thing.

Mutual agreement is gentler than it sounds. It need not be in writing, and it need not even be an enforceable bargain. In Burgess v Rawnsley, 1975, two joint tenants orally agreed that one would buy the other's share for £750. She then refused to complete, and he died. Severed anyway.

The agreement was not specifically enforceable for want of writing, but that did not matter. What it showed was that the parties no longer regarded their interests as joint. And in the alternative, the negotiations themselves were a course of dealing pointing the same way. That is what the third method catches: protracted dealings that treat the beneficial interest as divisible.

Then the written notice, which is the method you will meet most. It is unilateral. The others need not agree, and their refusal changes nothing. No particular form is required, so a signed letter is enough. No deed, and no registration, because severance operates in equity the moment the notice is served.

But it must be served, and service has its own rule. A notice is sufficiently served if it is left at the last known place of abode of the person to be served, under s.196(3) of the same Act. Which produces one of the better stories in land law.

In Kinch v Bullard, 1999, a wife's solicitor posted a notice of severance to her husband at the house. Before it arrived he had a serious heart attack. Now hoping to take the whole house by survivorship instead, she picked the letter off the doormat and destroyed it. He never saw it, and died a week later.

The notice was served when it was delivered to the house, and once served it could not be withdrawn. The joint tenancy had already been severed, survivorship never operated, and his share passed under his will. Delivery to the address is what counts, not reading, and not knowing.

Now the effect, and this is the point candidates most often get wrong. Severance converts the interest of the person who severed into a distinct share held as tenant in common. It does not blow up the joint tenancy for everybody.

So if A, B and C are equitable joint tenants and A serves notice, A holds a one-third share as tenant in common, which A can now leave by will. B and C carry on as joint tenants between themselves as to the other two-thirds, with survivorship still running between the two of them. Severance is individual, not collective.

And it is a lifetime act only. A will cannot sever, even one that says in terms, I sever the joint tenancy and leave my share to my nephew. That direction cannot operate until the testator dies, and by then survivorship has already taken the interest away. The instruction defeats itself.

Last part. What happens when someone's name is not on the title at all, or is on it but the shares are disputed? Two different questions hide in there, and keeping them apart is most of the skill. Do you have any interest at all? And if you do, how big is it?

Start with the older tool. A resulting trust arises where the purchase money comes from one person and the property goes into another's name. Pay the price for a house in your brother's name and he holds it on resulting trust for you. Contribute 70% of the price and the presumption gives you 70%. It arises by operation of law, and it can be rebutted by evidence of a gift or a different intention.

But do not reach for it in a family home. Its natural habitat now is the investment purchase, and the courts have taken it out of the domestic case almost entirely. Which brings us to the two questions, and they have two different answers depending on whose name is on the title.

Sole name first. The claimant must show she has an interest at all before anything else, and Lloyds Bank v Rosset, 1991, sets the threshold. Either an express agreement, arrangement or understanding reached between the parties themselves, on which she has acted to her detriment. Or a direct contribution to the purchase price or the mortgage instalments.

So fitting a new kitchen, landscaping the garden and paying for the household shopping does not do it. Nor does telling friends for years that he promised her half, if he never said anything of the kind to her. An express common intention has to be an agreement between the two of them, not a belief held by one.

Joint names is a different world. In Stack v Dowden, 2007, the House of Lords held that where the home is conveyed into joint names with no declaration of trust, equity follows the law. The starting point is that they hold as beneficial joint tenants, and therefore in equal shares, with survivorship.

So who paid what does not decide it. The resulting trust presumption has no application to a domestic purchase in joint names. The presumption of equality is rebuttable, but only by a common intention drawn from the whole course of dealing, and that will be the unusual case. In Stack itself the couple had kept their finances rigidly separate for years.

Then Jones v Kernott, 2011, added the dimension of time. The Supreme Court confirmed the equal starting point and held that the parties' intentions can change after acquisition. Where the court cannot infer what they actually intended, it imputes an intention. What they would probably have agreed had they thought about it, judged on the whole course of dealing.

So a couple who buy in joint names, separate, and then live for many years with one of them paying the mortgage alone may well end up far from equality. Not because the payer contributed more, but because the conduct shows an intention that changed.

A word on how SQE1 tests this. You are not asked to recall case names or section numbers. You get a scenario, five answers, and one instruction: pick the best. So learn the rules and how they decide facts. The names in this episode are memory pegs, nothing more.

If you keep only three. Williams v Hensman, for the three methods of severance, because everything else in severance is built on it. Stack v Dowden, for joint names meaning equal shares until somebody proves otherwise. And Lloyds Bank v Rosset, because a claimant whose name is not on the title needs an agreement or a contribution to the price before anything else is worth arguing.

Four traps. One: a will can never sever. Not one that leaves the share to somebody else, and not one that says in terms that the testator severs. Survivorship has already operated by the time a will speaks.

Two: severance is individual. The severing party gets a distinct share, and everybody else carries on exactly as before, joint tenants between themselves with survivorship still running. One notice does not turn three joint tenants into three tenants in common.

Three: look for an express declaration before you do anything else. If the transfer declares the beneficial interests, it is conclusive, and contributions, course of dealing and fairness all fall away. Reaching for Stack v Dowden when there is a signed declaration on the file is a wasted answer.

Four: match the test to the title. Joint names means a presumption of equal shares. Sole name means the claimant must first show an agreement or a direct contribution to the price. Apply the joint names presumption to a sole name case and you give away an interest the claimant never had.

Quick check. Three people are registered as proprietors of a house and hold the beneficial interest as joint tenants. One of them, wanting to leave his interest to his children, serves a written notice of severance on the other two, which they both receive. Six months later one of the other two dies, leaving everything by will to his widow.

The widow says the earlier severance broke the joint tenancy for all three, so her husband's interest passes to her. Who is now entitled to the deceased co-owner's interest? Three candidate answers. One: the widow, because the notice of severance ended the joint tenancy between all three of them.

Two: the widow, because a joint tenant served with a notice of severance may leave his interest by will. Three: the co-owner who did not sever, because she and the deceased remained joint tenants between themselves. Pause here if you want a moment.

The answer is three. A notice under s.36(2) severs only the interest of the person who gives it. He now holds a one-third share as tenant in common and can leave it to his children. The other two carried on holding the remaining two-thirds as joint tenants, with survivorship still running between them.

So when one of those two died, his interest accrued to the other and never formed part of his estate. The widow takes nothing. Why the others fail. One treats severance as collective, and it is not. Two assumes that receiving somebody else's notice severs your own interest. It does not.

Five things to take away. One: at law only joint tenancy, never more than four legal owners, and everything unequal happens in equity behind the title. Two: four unities for a joint tenancy, and unity of possession alone for a tenancy in common, which is why possession never tells them apart.

Three: survivorship beats the will, so sever in your lifetime or not at all. Four: severance converts only your own interest. The methods are an act on your own share, mutual agreement, a course of dealing, and written notice under s.36(2).

Five: an express declaration is conclusive, and without one, joint names presume equal shares while a sole name needs an agreement or a contribution to the price. And our sister? She takes nothing, and one letter in his lifetime would have given her half. Next time, Trusts of Land.

Practise this topic with exam-style questions at sqe1prep.co.uk. This episode is for education and exam revision only, not legal advice, and we are not affiliated with or endorsed by the SRA or Kaplan.