Property Ownership Under LPA 1925 and TOLATA 1996

Introduction

The current ownership of the house is joint tenancy, according to Section 36 of the Law of Property Act 1925 (LPA 1925). The latter paragraphs will address the legal provisions that relate to transfer of title to such property.

Severance and proceeds of sale of jointly owned property

The LPA 1925, s. 1(6) provides for joint tenancy co-ownership of legal title. Joint proprietors are those owners registered as proprietor of the land. The Trusts of Land and Appointment of Trustees Act 1996 (TOLATA 1996) 1996, s1 provides that ownership of a land concurrently by multiple people creates a trust of land.

The rule of survivorship applies in joint tenancy. The co-owners hold the interest together in the property. Thus, if one owner dies, the legal estate in entire property automatically and directly transfers to the surviving owners.

The rule of survivorship applies. In case an owner expires, the legal estate in the entire property automatically and directly passes to the surviving owners.

Joint tenants possess equal rights to the property. A will cannot transfer their assets of the property.

If a co-owner acts, whether by sale of interest to a third party or gifting of equitable interest to another, on their own share and immediately and unequivocally severs the joint ownership, tenants-in-common comes into play. The LPA 1925, s36(2) allows such alienation of share by this unilateral act, which is final and irrevocable.

Severance can also be by agreement between the parties, written or oral, or by a course of dealing sufficiently notifying that the ownership is tenancy-in-common.

Severance is implied when the owner takes a mortgage on the interest in the property. This converts the ownership into tenancy at common.

In tenancy-in-common, the owners can transfer their assets to anyone in a will.

The rule of survivorship is not applicable. In case an owner dies, the other owners do not get the title to the property. The will of the deceased will set out the distribution of the deceased. The rules of intestacy apply where there is no will.

a) First issue - proceeds of sale There has been a few unilateral acts that had converted the joint tenancy to tenancy-in-common. They are the 2017 loan taken by B against her interest in the property; B’s will to E; discussion of A, C and D to have separate and distinct shares; and A’s will to G. Thus, according to the LPA 1925, severance took place through this act. It does not matter even if the agreement was not in writing. The acts were sufficient to create tenancy-in-common.

Since rules of survivorship in this case do not apply, the proceeds of sale will be according to the will by and agreement between the parties.

b) Second issue - purchased as a business asset If the house had been purchased as a business asset in the future, the owners would have invested as 'tenants in common'. There would have been distinct shares in the property as per the contribution. The distribution of the proceeds of the sale of the property would not have been different. As seen Dig deeper into Property Rights Evolution and Legal Disputes with our selection of articles.

Conclusion

To conclude, joint tenants own the property jointly and equally. The rule of survivorship applies. It becomes tenancy-in-common through severance. Accordingly, survivorship does not apply. Owner can discharge their assets to anybody they wish.

Legislation

The Law of Property Act 1925

The Law of Property (Miscellaneous Provisions) Act 1989

The Trusts of Land and Appointment of Trustees Act 1996

Cases

First National Securities Ltd v Hegerty[1985] QB 850

Harris v Goddard[1983] 1 WLR 1203, CA

Malayan Credit Ltd v Jack Chia-MPH Ltd [1986] AC 549

Williams v Hensman (1861) 70 E.R. 862

Books

Barclay L, UK Law and Your Rights For Dummies (John Wiley & Sons Ltd 2006)

Braun A, ‘Will-Substitutes in England and Wales’ in Alexander Braun and Anne Rothel (eds), Passing Wealth on Death: Will-Substitutes in Comparative Perspective (Bloomsbury Publishing 2016.)

Finney MJ, Wealth Management Planning: The UK Tax Principles (John Wiley & Sons 2010)

Others

H.M. Land Registry, ‘Legal estates and beneficial interests: what's the difference?’ accessed on 28 November 2020

GOV.UK, ‘Joint property ownership’ accessed on 28 November 2020