Court considers the way in which jointly owned land is held

It’s a complicated area of the law when it comes to owning properly jointly. Without going into too much detail, you have both “legal” ownership and “equitable” or “beneficial ownership”, and any given property may have the same legal and beneficial owners, or these may be different people. Establishing the legal ownership is generally pretty straightforward, a look at the title deeds will tell you the name(s) of the legal owner(s). What they may not tell you directly is who owns any beneficial interest there may be, and to what extent.

Some examples where this issue may arise are as follows:

A domestic property is put into one partner’s (A) name only, but the other party (B) paid towards the purchase price and had paid towards the mortgage since. The legal owner would be A, but in all likelihood B would also be a beneficial owner

Two sisters buy a property for business purposes. One (C) sells her house and puts the money up, whereas the other (B) contributes more in terms of expertise. The legal ownership would show C and, but in what proportion?

In basic terms there are 2 ways in which parties can jointly own property. These are:

Joint tenants (sometimes called ‘beneficial joint tenants (BJTs)’):

· you have equal rights to the whole property.

· the property automatically goes to the other owners if you die (survivorship)

· you cannot pass on your ownership of the property in your will.

Tenants in common (TiCs). As tenants in common:

· you own different shares of the property (ideally in what proportions should be set out in writing).

· the property does not automatically go to the other owners if you die.

· you can pass on your share of the property in your will (or if you have no will under the intestacy rules).

The method of ownership is usually clear from the title deeds to any given jointly owned property. Indeed it is something that all lawyers should discuss with, and take instructions from, their clients when they are jointly buying property. This conversation most commonly takes place when couples are buying their own home. Failing to record this properly can lead to significant disputes.

In a recent case an individual (S) appealed against the High Court's decision that he and his parents owned a farm as beneficial tenants in common. S and his parents had formed a partnership in 1985 to take over the father's farming business, and they bought the farm in their joint names.

However, importantly, in his case the title deeds did not contain any express declaration as to whether the land was to be held by them beneficially as joint tenants or tenants in common.

The Court of Appeal (CoA) considered how land is held beneficially when transferred into joint names without an express declaration of trust. The CoA dismissed the appeal and held:

Generally, where land is transferred into joint names, there would normally be an assumption that the beneficial owners were the same as the legal owners. However there will always be relevant background information which can change things significantly. There was previous case law in which there was a starting assumption was that “beneficial ownership” would be held as BJTs, however, these cases were in the domestic context of cohabiting couples, whereas the current case was quite different.

Although the farm had also provided a home for the family, it was primarily a business which provided their livelihood, and S's relationship with his parents could not be equated to that between a cohabiting couple, as they had been business partners. There was a partnership deed for the business under which they were obliged to account to each other. Buying the farm had been a commercial decision made by the partners for the benefit of the partnership business.

There was also a very well-established legal principle that it was usually assumed that co-owners acquiring property for business purposes did not intend for the property to pass on death (survivorship) as would be the case if they were BJTs.

The CoA ultimately felt that where property was acquired for business purposes the assumption was that survivorship was not intended, and as such the property was held as TiCs.