The Difference between Joint Tenancies and Tenancies in Common - Essay Example

Poppy, Maisie, Bill, Ben, Jade have been best friends since they started school. In January 2007, they decide to buy a house in the Medway towns. Poppy pays 50,00, Maisie pays 30,000, Bill pays 25,000, Ben who is only 17 pays 20,000 and Jade pays 40,000. The property is conveyed to them as Joint Tenants. Bill and Ben start a relationship and decide to put locks on their rooms and the smaller of the two receptions preventing the rest of the group from having access. Poppy offers to sell her interest in the property to Maisie but before Maisie replies to Poppy, Jade in a fit of temper kills Poppy. Poppy had written a will and in the will she leaves all her property to Tony. Tony wishes to have the house sold. Advise Maisie, Bill, Ben, Jade, and Tony on whether the house will be sold and if it is, how the proceeds will be divided. You must cite and use relevant legal authority to support your answer???. harvard referencing and footnotes Introduction In the above it is necessary to discuss the difference between joint tenancies and tenancies in common in order to determine whether property can be transferred to another by a will. It is also necessary to examine the way in which registration can occur with regard to ownership of the property in order to determine whether all five friends would be entitled to be entered on the property register. There also needs to be a discussion in relation to the fact that Ben is only 17 when the property has been bought, as well as a discussion in relation to the differing amounts invested by each in the property. Joint tenancy or tenancy in common There are two forms of co-ownership of property, which are joint tenancies1 and tenancies in common2. A joint tenancy is a collective ownership of that property. When a joint ownership is created there is unity of ownership amongst the parties3. As a result of this unity of ownership the sale or disposal of the property has to be done collectively. The Council of Mortgage Lenders allows up to four persons to be entered onto the title deeds of the property, although other persons can contribute towards the purchase price of the property. Persons not entitled to be entered onto the register will acquire a beneficial interest in the property only, although, it might be possible for them to be included on the register at a later date, if one of the four named persons either sells their share of the property or dies. Joint tenancy agreements create the right of survivorship4. Under a joint tenancy all persons have an equal share in the property. When one of the joint tenants dies, their share of the property will be divided amongst the surviving tenants. Joint tenants cannot sell their share of property to anyone other than one of the joint tenants, and they cannot transfer their share in a will. Joint tenancies are classed as unseverable5. None of the other tenants can force one of the parties to sell their share of the property and any decision to sell must be a unilateral one as joint tenancy insists on unity of title6. In order for a tenancy to be recognised as a joint tenancy the ‘four unities’ have to be present. These four unities are unity of possession, unity of interest, unity of title and unity of time. With unity of possession all the tenants have equal rights over the enjoyment of the property and the land. Unity of interest dictates that each tenant will have the same kind of interest over the property and all profits derived from the property will be divided equally between them. Unity of title occurs where each of the tenants acquired their rights in the same conveyance, although simultaneous adverse possession can achieve unity of title as well. Unity of time requires that ach of the tenants acquired their vested interest in the property at the same time. In some cases it might be more appropriate for the parties to hold the property as tenants in common. This is particularly the case where the parties are to become business partners7, as the rights of survivorship are not appropriate in business dealings. A tenancy in common creates individual ownership in the shares of the property but can only be recognised in equity8 or through severance9. If words are included in the purchase of the property stating that the parties will have separate shares then severance is established. Where it is stated that the property is to be held in equal shares then severance can be presumed10. A tenancy in common would allow the parties to sell their shares in the property individually. In the above it has been stated that the parties are joint tenants. This would mean that neither of the parties would be entitled to sell their share of the property to anyone else or to leave their share in a will to another. If they had been regarded as tenants in common they would have been able to sell their individual shares in the property. As the rules of survivorship do not apply to tenants in common, those who are classified as tenants in common are entitled to leave their share of the property in a will. Persons entitled to be entered on the register and resulting trusts Within the UK a person any contract entered into by a person under the age of 18 might be regarded as void or voidable. Given that Ben is only 17 at the time that the property was bought; it is likely that his name would not be entered on the registration of the property. Since there can only be four persons entered onto the register, the property would be registered in the names of Poppy, Maisie, Bill and Jade. Although Ben cannot be entered on the register he would be entitled to a beneficial interest in the property based on his contribution to the purchase price. When determining the interest of Ben, the court would award him a share in proportion to the amount invested. Under the doctrine of resulting trusts, the court will award a share of the property to any person who has contributed towards the purchase price of the property11. The courts have recognised the doctrine of resulting trusts in cases where one of the party’s has provided money towards the purchase price, which is then only registered in the name of one of the parties12. In these circumstances the courts are entitled to make the presumption that the legal owner is holding the property on trust for the other party in shares according to their contribution13. In the situation above, Ben contributed £17,000 towards the purchase price, and so relying on the authority established in Tinsley v Milligan14, the court are likely to conclude that a resulting trust has been created. In this case the plaintiff had bought a house with her lesbian partner but in order to be able to claim benefits had chosen not to have her name included on the registration despite having contributed towards the purchase price. The respondent attempted to use the fact that the property was only registered in one name to deprive the plaintiff of their share when the relationship came to an end. In this case the courts were faced with the difficulty that the plaintiff had chosen to not have her name on the register so that she would be entitled to claim benefits. This caused problems as equity insists that he who seeks equity must do equity. Using common law remedies a plaintiff could assert their common law right to ownership provided that they did not need to rely on their illegal conduct to establish title. In this case the plaintiff did not need to rely on their illegal conduct to establish title her claim and the courts allowed the claim under common law remedies. If Ben had not paid towards the purchase price of the property he could rely on the case of Eves v Eves [1975]15 to assert his rights under a constructive trust. In this case the couple was unmarried and the property was registered in the man’s name only as he claimed that he was unable to include her on the register as she had not reached the age of majority. In this case the plaintiff had made no financial contribution to the property, however, the court held that the work she had carried out on the property entitled her to a quarter share in the property under the doctrine of a constructive trust. In the case of Ben, he needs only to prove that he contributed towards the purchase price, which would give him automatic rights under a resulting trust. Capacity to enter into a contract There is a general presumption in law that only certain persons will lack the capacity to enter into a contract. One of these exceptions is extended to those who have not reached the age of majority, that is to say, those that have not yet attained the age of 1816. There are certain exceptions where persons under this age might be entitled to enter into a contract. These include contracts for the supply of food, medicines, clothing and accommodation. A minor might be able to avoid a contract if the contract was specifically for the acquisition of a legal or equitable interest in property on a permanent basis. This would cover any form of contract for the purchase of shares or land. The minor is entitled to ratify the contract when they reach the age of 18 if they wish to remain bound by the contract. In order to avoid the contract the minor must repudiate the contract when they reach the age of 1817. The courts have taken the stance that such contracts will be voidable rather than unenforceable on the basis that it would be unjust to allow the minor to retain an interest without having to take steps to repudiate or ratify the contract18. If the contract is repudiated, the courts have the power to order restitution by instructing the minor to return the property to the defendant19. Severance of joint tenancy Severance can occur if one of the joint tenants sells their interest to another. Where such a severance occurs the joint tenancy can be converted to a tenancy in common. If one of the joint tenants buys the interest of another joint tenant the court will automatically rule that a severance has occurred. The courts have also ruled that a severance has occurred if one of the joint tenants unlawfully kills another20. This is based on the notion that it would be unjust for the joint tenant to benefit from the crime they have committed. Severance can be by agreement will all the joint tenants, although under s36(2) of the Law of Property Act 1925, it is possible for one joint tenant to sever their interest independent of the other joint tenants. An intention to sever, in this way, must be communicated to the other joint tenants in writing in order for it to be effective21. In the above scenario Poppy had offered her share of the property to Maisie. This was only a verbal communication and would therefore not be a binding severance until the intention to sever had been written down. If the courts decided that the severance was not complete at the time of Poppy’s death, because she had not communicated her intention in writing, the laws of survivorship would prevail. This would mean that Poppy’s share of the property would be transferred to the remaining joint tenants. However, as Poppy was killed by one of the joint tenants, the courts would be likely to infer that this amounted to a severance of the joint tenancy. If this were to be the case, then the will written by Poppy would entitle Tony to receive her share of the property. If the court decided that the actions of Jade caused the joint tenancy to be severed and replaced by a tenancy in common, Tony, as the new owner of Poppy’s share of the property would be entitled to sell his share of the property. Tony could not force the other tenants to sell their share of the property, as the law in relation to tenants in common only allows the individual to deal with their own individual interest in the property. As Jade would lose any entitlement to the property based on her actions, Ben could be included on the property register if the other tenants agreed to this being done. This would mean that Ben would then have a legal interest in the property rather than just a beneficial interest. Conclusion From the above the advice to the parties is that the actions of Jade are likely to amount to a severance of the joint tenancy, which would mean that they would then be classified as tenants in common. This would entitle them to deal individually with their share of the property, and would also entitle them to have any profits from the sale of the property divided in accordance to the amount that each of them had invested. Jade is likely to lose all her interest in the property as the law will not allow her to benefit from her crime. This could mean that Ben would be able to be entered on the register. Only four of the group can be entered on the register, and since Ben is under 18 and contributed the least, it is likely that he would be excluded from the register. He would, however, hold a beneficial interest in the property under the doctrine of a resulting trust. This would not entitle him to an equal share in the profits from the house, but would entitle him to an amount in proportion to the amount he invested. Tony is likely to inherit Poppy’s share if the court deem that the actions of Jade amount to a severance of the joint tenancy. This would not entitle him to order the others to sell the house, but he would be entitled to sell Poppy’s share of the property. If Poppy had communicated her intention to sell her share to Maisie in writing, and Maisie had agreed before Poppy was killed, then Maisie would be entitled to Poppy’s share of the property. 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