Sardine Cottage - Case Study Example

Bridley-on-Sea is a former fishing village on the south coast of England, which is close to the of Hanterbury and now consists largely of residential properties, both owner-occupied and council owned. There is also a large 100 bedroom hotel – the Ocean Hotel. The local council is Hanterbury Council. Four years ago, A, B and C, who are cousins, purchased Sardine Cottage, which is a three bedroomed house in the harbour area of Bridley-on-Sea as joint tenants in law and equity with funds that they inherited from their grandmother. At the time of the purchase, all three were undergraduates at Hanterbury University, but since graduation A and B have started work in management trainee positions for the Ocean Hotel. C became a postgraduate student at the University. Three months ago, A was told that the hotel wanted to send her on a one-year training programme in Geneva, Switzerland. She discussed the opportunity with B and C, saying that she would like Sardine Cottage to be sold, since in the future she may take up a hotel appointment anywhere in the world and she would rather have her share of the proceeds of sale. B and C told her that they did not want to sell the property, because of its convenience for their work and studies. A consulted a solicitor and asked the solicitor to send a ‘notice of severance’ to B and C. The notice was duly sent, but, before it was delivered to B and C at Sardine Cottage, B was rushed into hospital with serious heart problems. A collected the letters containing the severance notice, addressed to B and C, immediately after the postman delivered them to Sardine Cottage. B and C have never received the severance notice. B was informed that she was very seriously ill and made a will in hospital leaving all her real and personal property to her mother, W. Unfortunately, B died shortly after making the will. C is stricken with grief over the loss of her cousin B and feels that she would be unable to live in Sardine Cottage in the future. Consequently, she would like the Cottage to be sold. However, due to the credit crunch, A has been told that the training opportunity in Geneva is no longer available and she is opposed to the sale of Sardine Cottage where she wants to continue to live. Moreover, A would like to wait and see if the property market improves before making any decision to sell Sardine Cottage. Answer the following question. 1. Advise C as to her rights with respect to Sardine Cottage. She is aware of B’s will and that A’s solicitor sent a ‘notice of severance’ to B and herself which she did not receive. Introduction In order to advise C in the matter above it is necessary to consider the law in relation to joint tenancies, as well as the effects of severance. In this particular case it will also be necessary to discuss whether severance can be regarded as effective even though the parties involved have not received the severance notice. It will also be necessary to discuss whether W has any rights over the property in line with the will of B. This will involve examining whether a share of the property can be transferred when the tenancy is a joint tenancy. This will necessitate a discussion on the law surrounding survivorship and the effects of severance on the right to transfer ownership. Joint tenancies or tenancy in common Where property has been sold to two or more persons a joint tenancy1 or a tenancy in common2 will be created. Joint tenancies occur where each party has equal ownership of the property3. This gives rise to unity ownership, which results in any action to dispose of the property or sell the property having to be carried out collectively. Where a joint tenancy has been created the right of survivorship is applied4. This effectively means that when one of the joint tenants dies, their share of the property will be divided amongst the remaining tenants. Joint tenants are not allowed to sell their share of the property to anyone else, although they can sell their share to one or more of the other joint tenants. Shares held in this way cannot be passed by a will, and such tenancies are generally classed as unseverable5. Neither of the parties can exert pressure on the others to sell the property and any such decision to sell must be a unilateral decision in order to maintain unity of title6. With a joint tenancy the four unities must be present. These include unity of interest, unity of title, unity of possession and unity of time. With unity of interest each of the tenants have the same interest in the property, this means that if the property is sold by agreement, the profits will be divided equally amongst them. Unity of title is where the tenants acquire their rights in the same conveyance and unity of possession gives the tenants equal rights over the enjoyment of the land. Applying the principle of unity of time means that each of the tenants will have acquired their interest in the property at the same time. Tenancy in common is more likely to occur in business dealings7, as the right of survivorship would not be appropriate in such cases. With a tenancy in common each of the parties have individual ownership of their share of the property. This ownership is only recognised in equity8 or as a result of severance of a joint tenancy9. If the parties stipulate that the parties will hold their shares in this manner than severance is deemed to have occurred and a tenancy in common is created10. Persons holding shares in this way are entitled to sell their share of the property without the agreement of the other tenants. In the above, the parties would be regarded as joint tenants, as there was no mention in the initial purchase that each would hold their shares on an individual basis. This would mean that unless the joint tenancy had been severed the parties would not be able to dispose of the property without the agreement of the other tenants. Under the rules of survivorship this would mean that the share belonging to B would be divided equally between A and C, as B would not be entitled to transfer her share to W by her will. Severance of joint tenancy although joint tenancies are generally regarded as unseverable, there are occasions in which the court will regard the tenancy as severed. This could occur if one of the joint tenants sells their interest in the property to another one of the joint tenants. This would have the effect of converting the tenancy into a tenancy in common. Severance can also occur if all the joint tenants are in agreement, although s36(2) of the Law of Property Act 1925 will allow one joint tenant to sever their interest regardless of the wishes of the other tenants. Severance has to be communicated in writing to the other joint tenants in order for it to be effective11. Letter confirming severance not received As B and C did not receive the letter notifying them of A’s intention to sever the joint tenancy, it could be argued that the severance is not effective. However, in Re 88 Berkeley Road NW9 [1971]12 Goodwin had advised her solicitors to sever her tenancy with Eldridge. Eldridge was at work when the notice was delivered and Goodwin signed for the letter. When Goodwin died soon after Eldridge claimed to have never seen the letter. The court was asked to decided whether the severance was effective based on the assertion that the letter had not been received. The court held that the severance was effective, and would only be regarded as having not been severed if the letter had been returned to the solicitor as undelivered. Similarly in Kinch v Bullard [1998]13 the wife of the deceased had served a divorce petition on him along with a notice of severance just before he died. After his death the wife disposed of the letter and attempted to aver that the letter of severance had not been received at the address. The court established that the letter had been posted through the letterbox either the day before or the day after his death, and that even though he might not have received the notice, the severance was still to be regarded as effective. Conclusion Applying the rules of severance above to the present situation, this would mean that even though B and C did not receive the notice of severance, it would still be effective. This would entitle C to deal with her share of the property on an individual basis, and, although she cannot force A to sell her share of the property, she would be able to sell her own individual share of the house. As severance would be deemed to valid, B’s share of the property could transfer to W under her will. This would mean that W would become a tenant in common with A and C, and could either choose to live in the property or to sell her share. A would be entitled to retain her share in the property for as long as she wished, however, she would then become a tenant in common with whoever bought C’s share of the property as well as a tenant in common with W, unless she sold her share. Bibliography Ashburner, W, Principles of Equity, 2nd Ed, 1933, Butterworths Bryn Perrins, Understanding Land Law, 3rd Ed, 2000, Cavendish Publishing Ltd Butterworths Civil Procedure, The White Book, Volumes 1 & 2, 2002, Sweet & Maxwell Cockburn, T & Shirley, M Equity in a Nutshell, 2005, Lawbook Co Cockburn, T, Harris, W, & Shirley, M, Equity & Trusts, 2005, Butterworths Dixon, M. Modern Land Law, 5th Ed, 2005, Cavendish  Gravells, N P, Land Law Text and Materials, 2nd Ed, 1999, Sweet and Maxwell Gray, K & Gray, S, Elements of Land Law, 4th Ed, 2005, Oxford University Press Hayton, D J, The Law of Trusts and Equitable Remedies, 11th Ed, 2001, Sweet & Maxwell Pearce, R and Stevens, J, The Law of Trusts and Equitable Obligations, 2nd Ed, 1998, Thomas, M, Statutes on Property Law, 8th Ed, 2001, Blackstone’s Zander, M, The Law-Making Process, 3rd Ed, 1988, Weidenfield & Nicolson Glover, N & Todd, P, Inferring share of interest in home: Midland Bank v Cooke, 1995] 4 Web JCLI 28 September 1995. www.bailli.org www.opsi.gov.uk www.westlaw.ac.uk Read More