What Are The Rights That Undivided Owners Enjoy And How Has The Enactment Of The Trusts Of Land And Appointment Of Trustees Act 1996 Affected Those Rights?

When speaking of co-ownership, the law is usually referring to co-ownership of the same interest in the land; so for example, two people who both inherit a house from a will, become co-owners of that property. Co-ownership of a property describes the simultaneous enjoyment of land by two or more people. The Law of Property Act 1925 was important, and since 1926, the law only acknowledged one form of co-ownership- Joint tenancy Maugham J, in Re Warren observed:

"There is no doubt that, since the coming into force of the Law of Property Act, 1925, the position of undivided owners is different from what it was before .

Joint tenancy treated each co- owner as being entitled to the whole land but not being able to deal with the land independently because they did not have вЂ?individual shares’ in the land. The four unites: interest, title, possession and time, must all be present for a joint tenancy to be valid . The unity of time means that both tenants must purchase the property at the same time. The unity of Title says that both tenants have the same title to the property in the deed. If the deed only places a condition on one tenant and not the other, then the joint tenancy is invalid as they do not have the same title. Interest suggests that both tenants must have the same interest in the property, e.g. 2 owners each having a Ð'Ð... interest in the property. Possession provides that tenants must have the right to possess the whole property, i.e. one owner cannot be inappropriately excluded from the property by the other, or the joint tenancy will not be valid . This type of co-ownership was ideal for a husband and wife or a couple, but often proved to be difficult for business or commercial ownership.

A tenancy in common was the preferred option as it gave each co-owner a separate identifiable share and no other unities were needed apart from unity of possession. This was illustrated in Jones v Challenger, where the Court held the mother could not be ejected from the property as she was a tenant in common.

One of the main differences between the two was the right of survivorship. In a joint tenancy, the right of survivorship applies, so upon the death of a joint owner, the title passes to the surviving owner who receives sole ownership of the asset , as was the case in Wright v Gibbons , and so is subsequently not affected by either a will or trust. The death of a joint tenant has the same effect in equity as in law, so if one partner dies the property will simply pass to the other. Severance is needed however, when a married couple fall out or for business partnerships and house sharing . Mark Thompson has says that the abolition of joint tenancy would simplify things and avoid problems caused by right of survivorship. Tenancy in common does not have the right of survivorship so when a tenant dies the property passes to the personal representative, then to the beneficiary named in the will or next of kin.

Before 1926, it was possible for a joint tenant and tenancy in common to exist in both legal and equitable estate in the land . However, after 1925, it became impossible to create a tenancy in common at law, and legal owners of a co- owned property had to be joint tenants of the legal estate and would hold the land as �trustees of land’ for the entitled persons in equity . Now, co- ownership of the equitable interest can be by a joint tenancy or a tenancy in common.

The Trusts of Land and Appointment of Trustees Act 1996 (TLATA) came into force on 1st January 1997 and has reformed both land and trusts law, introducing trusts of land and affecting the law of concurrent ownership in several ways. To say the least, the Act has done away with the doctrine of conversion, phased out strict settlements, broadens the powers and rights of the beneficiary and trustee as well as extending the powers of the Court. For the purpose of this essay I will be focusing on the rights of beneficiaries.

The term �beneficiary’ for the purpose of TLATA, is:

�a person who under the trust has an interest in property subject to the trust including a person who has such an interest as a trustee or a personal representative ’

Under the TLATA beneficiaries gained a number if rights in relation to the management and disposition of the land, including any proceedings relating to the sale of the property. Under the LPA 1925, decisions regarding the proper management or disposition of trust property were always up to the trustee, whilst the rights of trust beneficiaries were limited to rights only in prospect of a sale. However, the changes were a result of the Court’s awareness that �exchange’ or capital value were no longer the only reasons why a beneficiary may want to gain some control and participate in decision making relevant to their own enjoyment of the land .

One of the main problems with the LPA, s. 25 , was the use of a trust for sale in co-ownership. Since the passing of the Law of Property Act 1925, the legal title to property could not be held under a tenancy in common, it must be held on a `trust for sale'. The trust for sale included a duty to sell but a power to postpone sale, which was not usually ideal in family or marital situations and often the Courts would need to use their discretion to achieve a fair result. The TLATA solves this problem, as under a trust of land there is no duty to sell and only a power of sale, so there is more flexibility. All land subject to a trust will be held on a "trust of land" (TLATA s 1). Trustees are no longer under an obligation to sell the land, as was the case with the old trust for sale (LPA 1925). Existing settlements are not included in this provision, although land already held on express or implied trusts for sale are included within the provision. This means that there is no longer a problem posed by an essential duty to sell, at times when that was the last thing that was intended.

Another problem posed by the LPA 1925 was with the doctrine of conversion. The TLATA abolishes the doctrine of conversion (section 3 ). This doctrine meant that the beneficial interest under the trust for sale was considered to be an interest in the monetary value of the land, meaning that in the eyes of equity the beneficiary had merely an interest in the notional proceeds of sale. If applied strictly this doctrine was awkward for the beneficiary, whose position was far more vulnerable than someone who had an interest in the land itself. This obviously would have been difficult in domestic situations and more often than not, the Courts had to rely on loopholes in the law to avoid its consequences and so they allowed beneficiaries rights in respect of the land,