Co-ownership arises when two or more persons hold an interest in the same piece of land simultaneously. English law recognises two distinct forms of equitable co-ownership: the JOINT TENANCY and the TENANCY IN COMMON. Legal co-ownership is limited to joint tenancy only (maximum four persons under LPA 1925 s.36). Understanding the distinction between legal and equitable co-ownership is essential for SQE1.
Legal estates in land can only be held jointly, not in common. The maximum number of legal joint tenants is FOUR. If more than four persons are entitled, the first four named are the legal joint tenants and hold the equitable interest on trust for all beneficiaries.
Section 36(2) LPA 1925 limits legal co-ownership to a maximum of FOUR persons. This means that where more than four people buy property together, only the first four named on the transfer will be legal owners. They hold the property on trust for themselves and the remaining beneficial owners. In practice, most residential purchases involve two to four legal owners, so this rule rarely causes difficulty.
Legal co-ownership can ONLY take the form of a joint tenancy. There is no such thing as a "legal tenancy in common." If co-owners wish to hold unequal shares at law, they must hold as joint tenants on trust for themselves as tenants in common in equity. The equitable interests behind the legal title can be held in whatever proportions the parties agree.
A joint tenancy in equity requires the presence of FOUR UNITIES. These must all exist at the time the joint tenancy is created. If any unity is absent, the parties hold as tenants in common instead. The four unities are: possession, interest, title, and time.
| Unity | Requirement | Meaning |
|---|---|---|
| Possession | Unity of possession | Each co-owner is entitled to possession of the whole property (not a specific part) |
| Interest | Unity of interest | Each co-owner must hold the same type and extent of interest (same share) |
| Title | Unity of title | All co-owners must acquire their interests through the same instrument or act of law |
| Time | Unity of time | All co-owners must acquire their interests at the same time |
The unity of possession means that each joint tenant is entitled to possession of the ENTIRE property, not just a defined physical portion. No joint tenant can claim exclusive possession of any part. This unity is common to BOTH joint tenancies and tenancies in common - it is not what distinguishes them. The right to occupy the whole is subject to the rights of the other co-owners.
The unity of interest requires that each joint tenant holds the same TYPE and EXTENT of interest. For example, all must hold fee simple absolute, or all must hold a life interest. They must also hold in equal shares. If A is entitled to 60% and B to 40%, the unity of interest is broken and they hold as tenants in common in those proportions.
All joint tenants must acquire their interests through the SAME instrument or disposition. For example, all names must appear on the same conveyance or transfer. If A acquires from one deed and B acquires from a different deed, the unity of title is absent. However, acquisition by the same act of law (e.g., intestacy) also satisfies this unity.
All joint tenants must acquire their interests at the SAME time. If A acquires today and B acquires next month, the unity of time is broken. In practice, this means all parties must be parties to the same transaction at the same moment. A purchase in unequal stages (e.g., staggered completion) may break this unity.
The right of survivorship (jus accrescendi) is the defining feature of a joint tenancy. When one joint tenant dies, their share does NOT pass under their will or under the rules of intestacy. Instead, it automatically passes to the surviving joint tenant(s) by operation of law. This is sometimes described as the share "accreting" to the survivors. The last surviving joint tenant becomes the sole owner.
A joint tenant CANNOT leave their share by will. Even if the will says "I leave my share to X," the right of survivorship prevails. The deceased joint tenant's share passes automatically to the surviving joint tenants. If a testator wants a beneficiary to inherit their share, they must sever the joint tenancy before death (convert it to a tenancy in common).
In an SQE1 question, if the facts state that A and B own as "joint tenants," then on A's death, B automatically becomes sole owner regardless of what A's will says. If the facts are silent on the type of co-ownership, presume a tenancy in common where the shares pass by will/intestacy. Check whether the property is registered and look for express declarations of trust.
A tenancy in common arises when the four unities are not fully satisfied, or where the parties expressly agree to hold as tenants in common. Each tenant in common holds a DISTINCT SHARE (which may be equal or unequal). There is NO right of survivorship: on death, the share passes under the deceased's will or under the rules of intestacy. The unity of possession still applies: each co-owner is entitled to possession of the whole.
A tenancy in common arises: (1) expressly by declaration of trust; (2) where the four unities are absent; (3) by severance of a joint tenancy; (4) by resulting trust (where one party contributes more to the purchase price); or (5) by constructive trust (where the court finds common intention). Since Stack v Dowden, unmarried cohabitants are presumed to hold as tenants in common, not joint tenants.
| Feature | Joint Tenancy | Tenancy in Common |
|---|---|---|
| Four unities required | Yes (all four) | No (only unity of possession) |
| Shares | Equal and undivided | Can be equal or unequal |
| Right of survivorship | Yes - automatic | No - passes by will/intestacy |
| Can leave share by will? | No | Yes |
| Severance possible? | Yes - converts to TIC | N/A - already TIC |
| Presumption for unmarried couples | Not presumed (post-Stack v Dowden) | Presumed (post-Stack v Dowden) |
| Presumption for married couples | Beneficial joint tenancy presumed | Possible if expressly agreed |
Severance is the process by which a joint tenancy is converted into a tenancy in common. Once severed, each former joint tenant holds a distinct share which can be disposed of by will. Severance can occur in several ways: by mutual agreement, by notice in writing under s.36(2) LPA 1925, by course of dealing, or by any act that destroys one of the four unities. Severance is only possible during the joint tenants' lifetimes.
(1861) 1 Beav 546; (1861) 70 ER 862
The court considered the various ways in which a joint tenancy could be severed.
Severance of a joint tenancy can occur in three ways: (1) mutual agreement between the joint tenants; (2) a unilateral act of one joint tenant communicated to the others; or (3) any course of dealing sufficient to intimate that the interests of the parties were mutually treated as constituting a tenancy in common.
The three methods of severance from Williams v Hensman are the foundation of severance law. They are not exhaustive - any act that destroys one of the four unities can sever.
A joint tenancy can be severed by mutual agreement of all the joint tenants. The agreement need not be in writing (unless it falls within the requirements of s.53(1)(a) Law of Property Act 1925 for the disposition of an equitable interest). A simple oral agreement or even conduct from which agreement can be inferred is sufficient. The key is that ALL joint tenants must agree.
Under s.36(2) LPA 1925, any joint tenant of a legal estate may sever their share by giving WRITTEN NOTICE to the other joint tenants. This is a unilateral right - the consent of the other joint tenants is NOT required. The notice operates in equity, converting the joint tenancy into a tenancy in common as regards the share of the severing party. The other joint tenants continue as joint tenants between themselves.
The unilateral notice under s.36(2) only severs a joint tenancy of a LEGAL estate. If the co-owners hold the equitable interest as joint tenants but the legal title is held by nominees or trustees, s.36(2) does not apply directly. In such cases, severance must be by mutual agreement or course of dealing. The written notice must actually be communicated to the other co-owners.
Severance by course of dealing arises from the CONDUCT of the parties. If the dealings between the co-owners are such that a reasonable person would conclude that they intended their interests to be separate rather than joint, severance occurs. This is the most fact-sensitive method. Examples include: one co-owner mortgaging their share, one co-owner entering into a contract to sell their share, or one co-owner acting in a way inconsistent with the joint tenancy.
[1975] Ch 429
A joint tenant entered into an agreement to sell her share to a third party. The question was whether this agreement severed the joint tenancy.
The agreement to sell was a course of dealing sufficient to evidence an intention to sever. The joint tenant had acted in a way inconsistent with the continuation of the joint tenancy.
An agreement to sell one's share, even if not completed, can sever a joint tenancy by course of dealing if it demonstrates an intention to treat one's interest separately.
Once severed, the joint tenancy is converted into a tenancy in common. The severing party holds their share as a tenant in common in equal shares with the other co-owners (unless the parties agree otherwise). The remaining joint tenants continue as joint tenants BETWEEN THEMSELVES. This is important: severance only affects the share of the severing party. If A, B, and C are joint tenants and A severs, A becomes a tenant in common and B and C remain joint tenants as between each other.
Severance operates in EQUITY first, then in law. The equitable joint tenancy is severed first. For the legal joint tenancy to be severed, the legal title must be updated (e.g., by entry of a restriction on the register). Until the legal title is updated, the trustees hold the legal estate on trust for the tenants in common in their respective shares.
Severance can only occur during the lifetimes of the joint tenants. It cannot occur by will (a direction in a will to sever is ineffective because the will only takes effect on death, by which time the right of survivorship has already operated). A notice of severance must be communicated before death. If a joint tenant attempts to sever by will, the right of survivorship will have already operated, making the bequest ineffective.
A resulting trust arises where property is purchased in the name of one person but the purchase money (or part of it) is provided by another. The person who provided the purchase money is presumed to have a beneficial interest proportionate to their contribution. This is based on the common intention presumed from the financial arrangements. Resulting trusts arise automatically by operation of law - they are not dependent on the parties' subjective intentions.
The classic resulting trust arises on the purchase of property. If A pays the full purchase price but the property is put in B's name, B holds on resulting trust for A. If A pays 70% and B pays 30%, but the property is in joint names, there is a resulting trust in those proportions (unless there is evidence of a different intention). The presumption is that the person who pays holds the beneficial interest.
Resulting trusts are relevant to co-ownership when cohabitants contribute unequally to the purchase price. If A pays the deposit and B pays nothing, A may have a larger share under a resulting trust. However, the presumption of resulting trust can be rebutted by evidence of a gift or a different common intention. Stack v Dowden limited the role of resulting trusts for cohabitants.
A constructive trust arises where the court finds that it would be UNCONSCIONABLE (unfair) for the legal owner to deny the claimant a beneficial interest. The court looks for a COMMON INTENTION (express or inferred) that the claimant should have a share, and DETERIMENTAL RELIANCE on that common intention. Constructive trusts are flexible and based on the whole course of dealing between the parties.
[1991] 1 AC 107
A husband purchased a property in his name. His wife claimed a beneficial interest based on discussions and her contribution to renovations. The bank claimed the wife had no interest when seeking possession against the couple.
For a constructive trust based on common intention, there must be either: (1) an express agreement about shares; or (2) a direct contribution to the purchase price. Discussions alone were not enough without financial contribution to the purchase.
Common intention constructive trusts require either an express agreement plus detrimental reliance, or a direct financial contribution to the purchase price. Non-financial contributions to household expenses or improvements are not sufficient under this approach.
[2007] UKHL 17
An unmarried couple purchased a property in joint names. The woman contributed significantly more to the purchase price. After separation, she claimed a 65% share. The question was how to determine the beneficial shares of cohabitants who held the legal title jointly.
The House of Lords held that where a property is in JOINT NAMES, equity follows the law: there is a presumption of EQUAL SHARES. This presumption can be rebutted by evidence of a different common intention, assessed by looking at the whole course of dealing between the parties. The resulting trust presumption (based on financial contributions alone) does NOT apply where the property is in joint names.
For unmarried cohabitants with property in joint names, the starting point is EQUAL shares (not shares based on financial contributions). This presumption can only be rebutted by evidence of a different common intention deduced from the whole course of dealing.
[2011] UKSC 53
An unmarried couple purchased a property in joint names. They separated after several years. The man left the property and stopped contributing to the mortgage. The woman paid the mortgage alone for many years. The question was how to determine their respective shares.
The Supreme Court confirmed Stack v Dowden: the starting point for joint names is equal shares. Where the parties' intentions have changed since acquisition, the court must impute an intention consistent with the whole course of dealing. Where it is impossible to infer actual intention, the court imputes an intention that each is entitled to what they would probably have agreed if they had thought about it at the relevant time.
Where the common intention has changed after acquisition, the court looks at the whole course of conduct to determine the parties' shares. If actual intention cannot be inferred, the court imputes an intention based on what the parties would probably have agreed.
| Factor | Stack v Dowden | Jones v Kernott |
|---|---|---|
| Property in joint names? | Yes - presumption of equal shares | Yes - equal starting point |
| Presumption rebutted? | By evidence of different common intention | By whole course of dealing |
| When intention assessed | At the time of acquisition | At the relevant time (may be after acquisition) |
| Imputed intention | Not primary focus | Used where actual intention cannot be found |
| Financial contributions | Part of whole course of dealing | Part of whole course of dealing |
| Aspect | Legal Co-ownership | Equitable Co-ownership |
|---|---|---|
| Form | Joint tenancy only (max 4) | Joint tenancy or tenancy in common |
| Statutory basis | s.36 LPA 1925 | Trusts of Land and Appointment of Trustees Act 1996 |
| Registered at Land Registry? | Yes - as registered proprietors | No - held behind the legal title |
| Right of survivorship | Yes (legal estate) | Only if equitable joint tenants |
| Can hold unequal shares? | No - equal shares | Yes - tenants in common can hold unequal shares |
| Number of owners | Maximum 4 | No maximum (unlimited beneficiaries) |