Co-ownership - Differences between joint tenants and tenants in common in law and equity

Learning Outcomes

After studying this article, you will be able to distinguish between joint tenancy and tenancy in common in both law and equity. You will understand the legal and practical implications of each form of co-ownership, including the right of survivorship, the concept of severance, and the statutory trust of land. You will also be able to explain how overreaching operates to protect purchasers and the significance of these concepts for SQE1 assessment.

SQE1 Syllabus

For SQE1, you are required to understand the differences between joint tenants and tenants in common in law and equity. This includes the ability to identify the characteristics of each form of co-ownership, the consequences of survivorship, the process and effect of severance, and the operation of overreaching. In your revision, focus on:

• the distinction between joint tenancy and tenancy in common in both law and equity
• the right of survivorship and its consequences
• the four elements required for a joint tenancy
• how and when severance can occur
• the statutory trust of land and the roles of trustees and beneficiaries
• the process and effect of overreaching on purchasers and beneficiaries

Test Your Knowledge

Attempt these questions before reading this article. If you find some difficult or cannot remember the answers, remember to look more closely at that area during your revision.

1. Which of the following is NOT a required element for a joint tenancy?
   1. element of possession
   2. element of title
   3. element of interest
   4. element of inheritance
2. What is the effect of severing a joint tenancy in equity?
   1. The co-owners become tenants in common in equity
   2. The legal estate is also severed
   3. The right of survivorship continues
   4. The property must be sold immediately
3. Which statement best describes overreaching?
   1. It destroys the legal title of the trustees
   2. It transfers beneficial interests from the land to the sale proceeds
   3. It applies only to leasehold property
   4. It prevents severance of a joint tenancy

4. True or false? A tenant in common can leave their share of the property to anyone in their will.

Introduction

Co-ownership arises when two or more people hold interests in the same property at the same time. The two principal forms are joint tenancy and tenancy in common. For SQE1, you must be able to distinguish between these, understand their legal consequences, and explain how the law protects both co-owners and third parties.

The statutory trust of land

Whenever land is co-owned, a statutory trust of land arises. The legal estate is held by trustees (the legal owners), while the beneficial (equitable) interests are held by the beneficiaries. The Trusts of Land and Appointment of Trustees Act 1996 (TOLATA) governs this arrangement.

Key Term: statutory trust of land
A trust automatically imposed by law whenever land is co-owned, separating legal and beneficial ownership.

Joint tenancy

A joint tenancy is a form of co-ownership where all joint tenants are regarded as a single owner for legal purposes. Each joint tenant is entitled to the whole property, not a specific share. The most important feature is the right of survivorship: when one joint tenant dies, their interest passes automatically to the surviving joint tenant(s), regardless of any will.

Key Term: joint tenancy
A form of co-ownership where co-owners are treated as a single entity, each entitled to the whole, with the right of survivorship.

The existence of a joint tenancy depends on the four elements:

Key Term: four elements
The four requirements for a joint tenancy: element of possession, element of interest, element of title, and element of time.

• Element of possession: Each co-owner is entitled to possess the whole property.
• Element of interest: Each co-owner has the same interest in the property (e.g., equal shares, same duration).
• Element of title: All co-owners acquire their interest from the same document or event.
• Element of time: All co-owners' interests vest at the same time.

If any element is missing, a joint tenancy cannot exist.

Tenancy in common

A tenancy in common is a form of co-ownership where each co-owner holds a distinct share in the property, which may be equal or unequal. There is no right of survivorship: on death, a tenant in common's share passes under their will or intestacy.

Key Term: tenancy in common
A form of co-ownership where each co-owner has a separate, undivided share, with no right of survivorship.

Unlike joint tenants, tenants in common need only the element of possession.

Legal and equitable ownership

The legal estate in land can only be held as a joint tenancy (s 1(6) Law of Property Act 1925). The beneficial (equitable) interest can be held as either a joint tenancy or a tenancy in common. This means that, in practice, the legal owners may hold the legal estate as joint tenants, but the beneficial interests may be held as tenants in common.

Key Term: legal estate
The formal title to the land, held by the trustees, who have the power to sell or mortgage the property.

Key Term: beneficial (equitable) interest
The right to enjoy the property or receive the proceeds of sale, held by the beneficiaries under the trust.

The right of survivorship

The right of survivorship (jus accrescendi) applies only to joint tenancies. When one joint tenant dies, their interest passes automatically to the surviving joint tenant(s). This does not apply to tenants in common.

Key Term: right of survivorship
The rule that, on the death of a joint tenant, their interest passes automatically to the surviving joint tenant(s).

Severance

Severance is the process by which a joint tenancy in equity is converted into a tenancy in common. Severance can occur by:

• Written notice (s 36(2) Law of Property Act 1925)
• An act operating on a joint tenant's own share (e.g., sale, mortgage)
• Mutual agreement
• Mutual conduct
• Bankruptcy or unlawful killing

Severance affects only the beneficial interest; the legal estate remains a joint tenancy.

Key Term: severance
The process by which a joint tenancy in equity is converted into a tenancy in common, ending the right of survivorship.

Overreaching

Overreaching is a mechanism to protect purchasers. When land is sold by two or more trustees, the beneficial interests of the beneficiaries are transferred from the land to the sale proceeds. The purchaser takes the land free of those interests.

Key Term: overreaching
The process by which beneficial interests are removed from the land and attached to the sale proceeds when purchase money is paid to at least two trustees.

Trustees and beneficiaries

Key Term: trustee
The legal owner(s) of the land, responsible for managing the property and holding it on trust for the beneficiaries.

Key Term: beneficiary
The person(s) entitled to the benefit of the property (e.g., occupation or sale proceeds) under the trust.

Worked Example 1.1

Question: Anna and Ben purchase a house as joint tenants in law and equity. Anna dies, leaving a will giving all her property to her sister. Who now owns the house?

Answer: Ben becomes the sole owner by survivorship. Anna's interest does not pass under her will.

Worked Example 1.2

Question: Chloe and David own a property as joint tenants in law and equity. David sells his beneficial interest to Emma. What is the effect?

Answer: The joint tenancy in equity is severed as to David's share. Chloe and Emma now hold as tenants in common in equity; the legal estate remains a joint tenancy.

Worked Example 1.3

Question: Four friends buy a house as joint tenants in law and equity. One friend wishes to leave their share to their child. What must they do?

Answer: They must sever the joint tenancy in equity (e.g., by written notice) to become a tenant in common. Otherwise, their share will pass by survivorship, not by will.

Exam Warning

In SQE1, always distinguish between the legal estate (which must be a joint tenancy) and the beneficial interest (which may be a joint tenancy or tenancy in common). Severance affects only the beneficial interest.

Revision Tip

Remember: only the right of survivorship distinguishes a joint tenancy from a tenancy in common in equity. Always check for the four elements and any express declaration.

Summary

Key Point Checklist

This article has covered the following key knowledge points:

• The legal estate in co-owned land must be held as a joint tenancy; the beneficial interest can be a joint tenancy or tenancy in common.
• The four elements (possession, interest, title, time) are required for a joint tenancy.
• The right of survivorship applies only to joint tenancies, not tenancies in common.
• Severance converts a joint tenancy in equity into a tenancy in common, ending survivorship.
• Overreaching protects purchasers by transferring beneficial interests from the land to the sale proceeds when money is paid to two trustees.
• Trustees hold the legal estate and manage the property; beneficiaries hold the equitable interest and are entitled to the proceeds of sale or occupation.
• Tenants in common can leave their share by will; joint tenants cannot unless they first sever the joint tenancy in equity.

Key Terms and Concepts

• statutory trust of land
• joint tenancy
• four elements
• tenancy in common
• legal estate
• beneficial (equitable) interest
• right of survivorship
• severance
• overreaching
• trustee
• beneficiary