What is a Tenancy in Common?
A tenancy in common is dramatically different to a joint tenancy as each tenant in common has an individual share in the land. Therefore it is possible for each tenant in common to own a different proportion of the land. Another crucial difference between the two forms of co-ownership is that in a tenancy in common there is no right of survivorship. The final key difference is that only one of the four unities has to be present this is the unity of possession.
What are the key advantages of a joint tenancy?
A major advantage of the joint tenancy is the convenience it provides with relation to conveyancing as the joint tenants are treated as one unit and therefore none of them can act alone leaving the purchaser with only part of an interest when they anticipated getting the full title to the land as in Ahmed v Kendrick.
Another advantage of the joint tenancy which is a result of the right of survivorship is that it is more convenient for trustees On the death of a trustee, it is not necessary to recover the share of that trustee from his personal representatives and then vest it in the surviving trustees or in the surviving trustees with a new trustee. The legal estate automatically vests in the surviving trustees.
Another advantage of the joint tenancy is that it protects the land from unsecured creditors; this means that if a joint tenant dies and has creditors they are not entitled to the land as upon the death of the joint tenant the land automatically vests in the other joint tenants. However, this aspect of the joint tenancy has been highly criticised.
A further advantage of the joint tenancy for couples is that it is a good method of estate planning as on the death of one partner the land is automatically vested in the other therefore this avoids the need for often costly and complicated estate planning.
A final advantage of the joint tenancy is that it is more flexible as it can be converted to a tenancy in common at any time by an act of severance. This is especially an advantage at times where relationships break down.
What are the key advantages of a tenancy in common?
The main advantage of the tenancy in common is that it is the most fair form of co-ownership, this is why equity prefers the tenancy in common mainly because the right of survivorship does not apply therefore for example a co-owner who puts only 10% of the purchase price towards the property does not become to sole trustee based simply on the fact that they have lived longer than the other trustees. There also seems to be some tax savings in holding land this way.
Another advantage of the tenancy in common is that each tenant in common has their own individual share in the land which means that they can convey it to a purchaser or leave it to their heirs and this is due to the fact that the right of survivorship does not apply.
Is it possible to change from a joint tenancy to a tenancy in common?
Through a process of severance is possible to change from a joint tenancy to a tenancy in common in equity. There is two key ways in which this can occur. Firstly the statutory method done by s.36 LPA 1925 by the joint tenant requesting severance giving written notice to other joint tenants an explanation of the act of statutory severance is given in Harris v Goddard. However the legislation does not say that the other joint tenants have to read it as in Kinch v Bullard.
The second key way to sever a joint tenancy into a tenancy in common is by common law methods, these were set out originally in Williams v Hensman as severance by acts of a joint tenant operating upon his own share which is alienation, secondly by mutual consent as in Burgess V Rawnsley The Court of Appeal held that an oral agreement by one joint tenant to buy another’s share was a course of dealing which sufficed for the act of severance and finally severance by course of dealings also illustrated in Burgess6. A further example is given in Re:Gorman which shows that a joint tenancy is severed by an operation of law if one party becomes bankrupt. The final form of severance at common law would be by one joint tenant killing another, in this case the right of survivorship does not apply this is based upon equity’s intervention that people should not profit from wrong doing.
How did the 1925 and subsequent legislation change the situation?
The 1925 legislators had to consider both the convenience on the joint tenancy and the fairness of the tenancy in common. Therefore the 1925 legislators tried to accommodate both of these ideas and made it essential to differentiate between the position in law and equity. This is primarily due to the abolition of the legal tenancy in common, therefore at law all land has to be held in a joint tenancy. There was also a change that there can only be four legal owners of land.
However, in equity the tenancy in common can still operate under a trust. This is done firstly because the LPA 1925 imposed a trust on some cases on co-ownership and Trusts of Land and Appointment of Trustees Act 1996 (TLATA) imposes a trust on all land sold to co-owners thereby separating the position at law and in equity. Therefore when land is being conveyed to tenants in common they will hold the land as joint tenants on trust for themselves as tenants in common. The equitable interest will in registered land be overreached as there will always be a minimum of two trustees. This was brought up in City of London Building Society v Flegg.
TLATA also imposed some other changes, firstly under s.26 LPA 1925 the legal owners were obliged to consult only the beneficiaries of a statutory trust before a sale of the land, this is replaced by s.11 TLATA 1996 which obliges legal owners to consult beneficiaries under any type of trust. This makes the situation fairer for beneficiaries under non-statutory trusts.
TLATA also makes some other changes which improve upon the provisions in the 1925 legislation this is that the doctrine of conversion has been abolished though overreaching will still apply and that there is an avoidance of the duty to sell.
Conclusions
Overall, we can see that it is more convenient to hold the land as joint tenants especially from a conveyancing point of view but more fair to hold land as tenants in common. However, we can see that the right of survivorship does have many advantages but it is main vice of unfairness is still present.
The 1925 legislation has made a good compromise between the two as apart of fulfilling their key objectives. However, there were some large problems which were mostly solved by TLATA.
