Nature of Co-Ownership

Nature of Co-Ownership

Co-ownership arises when more than one person owns the same estate, interest or title in land. Together, the co-owners own the estate in land collectively.

There are two principal forms of co-ownership, namely joint tenancy and tenancy in common. In this context, the use of the word “tenancy” does not imply that the owners hold as tenants or lessees. It is in the sense of “tenure”.  Freehold co-owners are described as joint tenants or tenants in common.

The most significant practical distinction is that the so-called right of survivorship attaches to a joint tenancy. This means that on death, the other joint owners automatically acquire ownership of the deceased’s joint owner’s share.

In contrast, on the death of a tenant in common, his share in the property passes to the persons entitled to his assets on death (defined by his will or by the rules of intestacy). Where two joint tenants die simultaneously, for example in an accident, then they are deemed to have held their shares as tenants in common in equal shares immediately prior to death.

Severance of a joint tenancy means that it is transformed into a tenancy in common. Prior to the recent Conveyancing Act, the owner of a joint tenancy could sell his or her interest and thereby sever it. A major change made by the recent legislation is that severance generally requires the consent of all joint owners.

Number of Co-Owners

In principle, it is possible to have as many legal co-owners as parties decide. In contrast, under English Law, it is possible to have a maximum of four legal owners. All other ownership must be under a trust.

When the Irish land laws were revised in 2009, no equivalent restriction was imposed.  In Ireland, many investment structures in property-based investments were by a way of co-ownership agreement. It was thought desirable to maintain the possibility of having numerous legal co-owners without restriction.

A company can be a joint tenant so that it potentially continues forever and succeed inevitably to the estate.

Creation of Joint Tenancy

Certain conditions apply in relation to the manner in which a joint tenancy is created. The joint owners must acquire their ownership collectively and together. They must taken their interest at the same time.

There must be the so-called four unities; unity of possession, unity of interest, unity of title and unity of time. The ownership must be created at the same time without specifying any share.

Each joint owner must have the same “interest” in the land. One cannot, for example, have leasehold interest while another has a freehold interest. There is an exception whereby both may have the same interest, but one may have an additional interest.

Joint owners, by definition, are entitled to the property equally. None may own a distinct share. On sale, the sale proceeds are divided equally.

Joint owners may acquire title by possession. Generally, when persons acquire ownership by possession against the “true” owner, they acquire as joint owners. This will commonly occur when a grant of probate is not taken out upon the death of a family member. After a certain period, it will be too late for other beneficiaries to claim the title against the persons in possession of the deceased’s property.

Creation of Tenancy in Common

In contrast with joint tenancy, tenants in common each have a separate share. The only unity is the so-called unity of possession. A tenancy in common may arise if one of the above-mentioned unities (possession, interest, title or time is absent.

Any wording which implies a particular share creates a tenancy in common.Certain wording in the deed or document creating the interest is presumed to create a tenancy in common.

The shares of tenants in common need not be equal. The shares can be whatever is desired. They can be expressed by any appropriate language such as “parts”, percentages or fractions

If the shares were unequal, then a tenancy in common would definitely exist. However, it is possible and indeed very common to have tenants in common in equal shares. A transfer to A and B might be presumed to be a joint tenancy. However, a transfer to A and B in equal shares would be presumed to be a tenancy in common in equal shares.

Severance

Severance of a joint tenancy converts it into a tenancy in common. Once severed, the joint tenancy becomes a tenancy in common and the right of survivorship ceases to apply. Once severed, a tenancy in common may not be reconverted into a joint tenancy without being re-granted.

A significant change was made by the 2009 land law reforms in relation to severance. It is no longer possible to sever a joint tenancy unilaterally.   This reflects a policy that joint ownership should be an arrangement that cannot be terminated unilaterally.

Co-owners may be shown to have severed the joint tenancy by their conduct. If the parties acted as if the joint tenancy no longer existed by a course of dealing, the courts could infer that severance has taken place in equity. The 2009 Act preserves the possibility that the agreement to sever may be inferred by conduct.

Severing a Joint Tenancy

The Land and Conveyancing Law Reform Act 2009 provides that a joint tenancy whether at law or in equity may not be severed so as to become a tenancy in common without the consent of each joint tenant in writing. Accordingly, the legislation confirms that a contract or conveyance by one joint tenant of his interest without the consent of the other is void at law or in equity.

It is possible for the court to dispense with the requirement for consent. In an application to dispense with consent, the court must be satisfied that the other co-owner is unreasonably withholding consent.It is always possible to go further and apply to court to seek partition or sale of the property, as mentioned separaely.

Upon registration of a judgment mortgage against a joint tenant, the joint tenancy is not severed. As the joint tenancy remains unsevered, the judgment mortgage terminates on the death of the owner against whom the judgment mortgage is registered. It can be enforces aganst the interests of the owner charged.

The parties may consent to ownership being severed in a way that is not formally recorded in writing. As with other property transfers,  where parties act on the basis of an agreement and it would inequitable on account of a change of position, not to enforce it, effect may be given to it, notwithstanding the lack of formality. The 2009 Act preserves the jurisdiction of the court to find that all the joint tenants by mutual agreement or by their conduct have severed the joint tenancy in equity.

Indeed, the courts may always find that a legal joint tenancy is in fact held as a beneficial or equitable tenancy in common. See below in relation to this aspect of co-ownership.

Termination of Co-ownership

Partition is the physical division of the property. It terminates co-ownership. The joint owners can partition the property by agreement.  One co-owner cannot partition the property without the consent of the other.

One owner sell  the entire property without the consent of all.  A co-owner can apply to the court for an order a sale in lieu of partition. An application could be made to the court for a partition and/or sale. Courts have the discretion to refuse.

The High Court or Circuit Court may resolve questions in relation to the sale of co-owned property. An application may be made for partition, sale and/or for an order to account for adjustments of entitlements between owners. This gives the co-owner an ultimate means of realising the value of his share in the property.

This commonly arises where on ownere is is excluded, by his co-owners. However, it is not limited to these circumstances.

An application may also be made to dispense with consent to severance of a joint tenancy, on the basis that it is unreasonably withheld. The court may make an order with conditions.

The application may be made by a person having an interest in the property. This includes a mortgagee or creditor. It includes the holder of a judgment mortgage against the share of on owner.

Commonage refers to land held in common, typically for pasturage rights. Applicants holding land in common may apply to the Department of Agriculture for the preparation of a scheme of partition. An appeal lies to the High Court.

Survivorship Issues

Where two or more joint tenants die in circumstances that make it uncertain which of them survived the other, then for the purpose of survivorship under a  joint tenancy, they are effectively deemed to hold the property as tenants in common immediately before their deaths. Accordingly, the property would pass to their estate and onto the beneficiaries under their will or other persons entitled to succeed them on intestacy.

A significant proportion of all murders and manslaughters are committed by the other spouse. The Succession Act  1965 provided that in the case of succession by will or intestacy and death (but not by survivorship) a sane person who has been guilty of the murder, attempted murder or manslaughter of another shall be precluded from taking any share in the estate of that other, except a share arising under a will made after the act constituting the offence. The legislation was extended to civil partners.

The person so found guilty is also precluded from making an application as a child on the basis of the deceased having failed in his or her moral duty to make proper provision. It also provided a person found guilty of an offence against the deceased spouse or civil partner or any child of the deceased or person in respect of whom he was in loco parentis punishable by imprisonment for at least two years, may not make such an application.

Where one joint tenant is convicted of the murder and manslaughter of the other, the position regarding survivorship was formerly unclear. There was some case law that held that where the murder was for the purpose of benefiting from the survivorship, or under other case law, where the killing was unlawful, the survivor should be deprived of the benefit of survivorship.

In a  high profile case where a husband was convicted of his wife’s manslaughter, the High Court held that the husband succeeded to the legal joint tenancy but that he must hold it on trust for his wife’s estate, effectively their children. Following this case, the matter was examined by the Law Reform Commission.

Legislation has been proposed to provide that the person found guilty, could be stripped of his or her (e.g. half) share, as well as not succeeding by survivorship. The law does not generally provide for forfeiture of property by way of punishment and the proposed legislation was considered to be potentially problematical from a Constitutional perspective.

Legal and Beneficial Co-Ownership

The law in relation to co-ownership must be considered from the perspective of the distinction between legal and equitable ownership. It is possible to have legal joint tenants but equitable tenants in common. Indeed it is usual that trustees are joint owners (being bare legal owners with automatic survivorship), while the beneficiaries hold their shares as tenants in common.

The legal owners may be and often are the same persons as the beneficial owners. Legal joint owners may hold the property in trust for themselves as tenants in common in particular shares. For example, it may be that A and B hold the property as legal joint tenants on trust for themselves as beneficial tenants in common (i.e.in equity)  as to A, a 20% undivided share and as to B, a 80% undivided share.

This would mean, that as regards third parties, they would appear to be joint owners, but they must account to each other for their respective shares as tenants in common. In this case, where the co-owner dies, the legal owners will take the legal title to the property by survivorsship, but he or she must account to the personal representatives of the deceased owner in respect of his beneficial (equitable) tenant in common share.

Finding Beneficial Co-Ownership Shares

It may be that one owner is a legal owner in a particular share but that another person has made contributions towards the purchase price or the redemption of a mortgage such that the latter has a beneficial interest, or a different beneficial interest share to his legal share. In this case, the legal interests are held by the legal owners, in trust for the beneficial owners in the respective shares.

The Courts of Equity (dealing with equitable interests) were more flexible and concerned with fairness than the Courts of Law (dealing with legal interests). They were accordingly more willing to find an intention to create a tenancy in common, where the application of joint ownership rules would be anomalous. The equitable rules were given priority when the Courts of Equity and Law merged.

There is no presumption of tenancy in common, but there is a preference for it, where this accords with the economic interests of the parties. Where purchase monies are provided in different shares by unrelated parties in a commercial setting,  it is presumed that the parties are tenants in common in equity in the respective shares, even if they are joint tenants at law (i.e. on the face of the deed or Register).

Where partners purchase assets, there is a presumption that the property is to be held as tenants in common as between themselves. This reflects their underlying commercial relationship. The partnership agreement or Partnership Act will determine their proportionate shares. In a partnership, one person may hold the legal title but may in effect hold it as partnership property, in accordance with their rights as partners.

Proportions

There is a general presumption of a tenancy in common as to the equitable (beneficial) interests, where the purchase monies were provided unequally by unrelated parties. The courts presume that each was to enjoy the property  in shares proportionate to his contribution.

This presumption can be displaced where it can be shown or inferred that one party intended to benefit the other. This would usually be the case, where a married couple purchase property together.

The presumption can also be rebutted where there is a prior relationship between the parties, by which one owes duties and obligations to the other. Parents have duties to maintain and provide for their children.

In the above cases,  the presumption is that there was an intention to hold the property as joint owners, notwithstanding the unequal contributions. Historically, it was assumed that the husband wished to benefit his wife but not vice versa. This is likely to be no longer applicable in view of the Constitution and modern circumstances in which each spouse is bound to maintain the other.

References and Sources

Primary Texts

Wylie on Irish Land Law Wylie 6th Edition 2020

Land Law In Ireland -Lyall 4th Edition 2018

Principles Of Irish Property Law de Londras 2nd Edition 2011

Equity and the Law of Trusts in Ireland- Keane 3rd Edition

Land Law Kenna & Murphy 2019

Land Law Pearce & Mee 3rd Edition 2011

Other Irish Sources

The Land and Conveyancing Law Reform Act 2009: Annotations and Commentary -Wylie 2nd Edition 2017

Property Legislation 2009 2011 Cannon, Clancy, Kenna 2012

Irish Land Law – A Casebook: Adanan Maddox 2020

A Casebook on Equity and Trusts in Ireland – Wylie

 

Shorter Guides

Land Law Nutshell Cannon 2020

 

 

UK Textbooks

Land law C. Bevan 2nd ed.2020

Land Law: Text, Cases and Materials B McFarlane, N Hopkins and S Nield, (4th ed. OUP 2018)

Property Law R Smith(10th ed., Pearson, 2020)

Cheshire and Burn’s Modern Law of Real Property by Burn, E. H. 2011

Modern Land Law Dixon 2018

Elements of Land Law Gray, 2009

Property law: cases and materials Smith 2015

Land law Cooke 2015

The Limitation of Actions, 2nd ed Brady and Kerr 1994

Limitation of Actions Canny 2016

 

Co-Ownership of Land: Partition Actions and Remedies – Conway

Compulsory Purchase and Compensation in Ireland: Law and Practice – Galligan and McGrath

Intangible Property Rights in Ireland- Power

 

Investigating Unregistered Title- Magee 2012

Irish Conveyancing Law- Wylie & Woods 4thEdition 2019

Irish Conveyancing Precedents- Laffoy

Irish Conveyancing Statutes – Wylie 2020 6th Edition:

eConveyancing and Title Registration quantity

Complex Conveyancing Law Society PPG Hession 2nd Edition

 

Registration of Deeds and Title in Ireland – Deeney 2014

Consolidated Landlord & Tenant Legislation Editor: Mark O’Riordan Mar 2007

Irish Landlord and Tenant Acts: Annotations, Commentary and Precedents – Wylie 2015

Residential Tenancies – Farrell & Wylie 2018

Landlord and Tenant Law: The Residential Sector Ring, Cassidy, 2nd Edition 2020

 

Easements Bland 2nd Edition 2015

The Law and Taxation of Trusts – Keoghan, Mee, Wylie

National Asset Management Agency Act 2009: Annotations and Commentary – Byrne, McEntagart

Co-ownership of land Conway, H 2nd Edition 2012

Specific Performance in Ireland – Buckley, Conroy, O’Neill 2012