Co-ownership is concurrent ownership, possession and enjoyment of property. Adrian, Bianca, Chris, David, Erica and Fred have purchased a holiday home together. They are joint tenants in the property. Fred sold his interest to Peter. Bianca’s interest passed to her boyfriend, Matt, under her will after her death. Chris left his interest under the will to a charity. He had severed the joint tenancy and sent the information by recorded delivery. This was signed by Peter but was not shown to the others. Peter lives in the property. Erica wishes to sell the property, but Adrian and David do not wish to sell.
Joint tenancy is a type of co-ownership. Joint tenancy involves four unities in all the joint tenants- unities of title, interest, possession and time. Therefore, joint tenants have the same interest, under the same document, vested at the same time and are entitled to possession of the joint tenancy.
The right to survivorship is the primary incidence of joint tenancy. As per this principle, the entire tenancy on the death of any joint tenant remains to the survivors. The principle is known as jus accrescendi and is the most important feature of joint tenancy. Under this principle, when one joint tenant dies the remaining share would vest in the survivor or survivors by the right of survivorship and would not devolve under the will or intestacy. There is an exception to this. Where one joint owner severs his joint ownership unequivocally and with immediate effect, he becomes a tenant in common. Then his interest may be inherited by a third party under his will, or his heir in case of intestacy.
Under LPA 1925 s36(2), notice of severance must be served to all joint tenants. It must be intended to take immediate effect and must be unequivocal (Re Draper’s Conveyance). Notice must be validly served either by ordinary post (LPA 1925, section 196(1)) leaving notice at the property (LPA 1925, section 196(3); Kinch v Bullard) or by recorded delivery post (LPA 1925, section 196(4); Re 88 Berkeley Road). If the notice is sent by recorded delivery post and is not returned by the Post Office to the sender marked ‘undelivered’, severance will take place even if the notice never comes to the attention of the intended recipients (Re 88 Berkeley Road). The requirement for this to happen is that notice should be immediate and unequivocal. As Peter signed the notice, it is valid and accordingly, Chris has severed his joint tenancy. This has turned Chris into a tenant-in-common. Therefore, under his will his interest can pass to the charity.
Joint tenancy may be severed by any joint tenant, operating on his own share. This may include sale of own interest to another (First National Securities Ltd v Hegerty) or gift of equitable interest to another. LPA 1925, s.36(2) allows the joint tenant to alienate his share by a unilateral act (Harris v Goddard). It provides that the joint tenant must do so by a final and irrevocably. Any transfer by the joint tenant to another person is regarded as an act of severance. The person to whom the share is transferred is not a joint tenant, but a tenant in common. The remaining joint tenants are still bound by the rule of survivorship. Legal ownership remains unchanged, but equitable ownership devolves upon the transferee. The transferee’s interest is held by the other joint tenants under an equitable trust. The sale to Peter will hold in equity. The gift to Matt comes under Bianca’s will. A joint tenant cannot pass the property to another under a will (Gould v Kemp). Any transfer has to be inter vivos.Therefore, Bianca’s interest will devolve on the remaining joint tenants but not on the tenants in common.
As there are 5 joint owners with equal shares, Peter has received one fifth of the share as a tenant in common. Similarly, the Charity has also received its one fifth shares as tenants in common. This leaves Adrian, Erica and David as joint tenants holding the property in equitable trust for Peter and the Charity.
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