Learning Outcomes
After reading this article, you will be able to identify and explain the main legal and equitable issues that arise when investigating title to co-owned property. You will understand the distinction between joint tenancy and tenancy in common, the significance of restrictions and overreaching, and the practical steps required to ensure a buyer acquires good title free from undisclosed interests. You will also be able to apply these principles to SQE1-style scenarios.
SQE1 Syllabus
For SQE1, you are required to understand how co-ownership affects the investigation of title in both registered and unregistered land. You must be able to:
- distinguish between joint tenancy and tenancy in common, and explain their legal consequences
- identify how co-ownership is revealed in title documents and registers
- explain the significance of restrictions on the register and the process of overreaching
- advise on the steps required to ensure a buyer takes free of beneficial interests under a trust
- apply the rules relating to severance and the appointment of trustees in co-ownership situations.
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.
- What is the main difference between a joint tenancy and a tenancy in common in relation to survivorship?
- In registered land, what does a Form A restriction indicate about the beneficial ownership of a property?
- What is overreaching and why is it important when buying from a sole surviving tenant in common?
- What steps must a buyer take when purchasing from a sole surviving co-owner to ensure they acquire the property free of any beneficial interests?
Introduction
When investigating title to property held by more than one person, it is essential to identify the nature of the co-ownership and any associated equitable interests. Co-ownership can affect who is entitled to sell, who must sign the transfer, and whether the buyer will be bound by any interests behind the legal title. For SQE1, you must be able to distinguish between joint tenancy and tenancy in common, understand how these are revealed in title documents, and know the steps required to ensure a buyer acquires good title free of undisclosed interests.
Co-ownership: Joint Tenancy and Tenancy in Common
Co-ownership arises when two or more people hold the legal title to property together. The legal estate can only be held as a joint tenancy, but the beneficial (equitable) interest can be held as either a joint tenancy or a tenancy in common.
Key Term: joint tenancy
A form of co-ownership where the co-owners are equally entitled to the whole property and the right of survivorship applies. On death, a joint tenant’s interest passes automatically to the surviving joint tenant(s).Key Term: tenancy in common
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.
Identifying the Type of Beneficial Ownership
In registered land, the legal estate is always held as a joint tenancy. The beneficial interest may be held as a joint tenancy or as tenants in common. The distinction is essential for determining what happens on death and who is entitled to the sale proceeds.
A Form A restriction on the proprietorship register is the key indicator that the beneficial interest is held as tenants in common.
Key Term: Form A restriction
A restriction on the register stating: “No disposition by a sole proprietor of the registered estate (except a trust corporation) under which capital money arises is to be registered unless authorised by an order of the court.” This signals that the beneficial interest is held as tenants in common.
Severance of Joint Tenancy
The beneficial joint tenancy can be severed, converting it into a tenancy in common. Severance can occur by written notice, mutual agreement, or certain acts (such as sale of a share). Severance does not affect the legal estate, which remains a joint tenancy.
Worked Example 1.1
Three siblings, A, B, and C, are registered as proprietors of a property. The proprietorship register contains a Form A restriction. C has died. Can A and B sell the property alone, and what must they do to ensure the buyer takes free of C’s beneficial interest?
Answer: The Form A restriction means the beneficial interest is held as tenants in common. On C’s death, their share passes under their will or intestacy. To overreach C’s interest, the buyer must pay the purchase money to at least two trustees. If only A and B remain, they can sell as joint legal owners, and the buyer will take free of C’s beneficial interest if the purchase money is paid to both.
Overreaching and the Role of Trustees
When property is held on trust for beneficiaries, a buyer can take free of those equitable interests if the purchase money is paid to at least two trustees (or a trust corporation). This is known as overreaching.
Key Term: overreaching
The process by which a buyer, paying capital money to at least two trustees or a trust corporation, ensures that any beneficial interests under a trust are transferred from the land to the purchase money, so the buyer takes free of those interests.
If only one surviving trustee remains (for example, after the death of a co-owner), a second trustee must be appointed before completion to allow overreaching to occur.
Worked Example 1.2
A and B are registered proprietors with a Form A restriction. B has died, and A wishes to sell the property. What must A do before completion?
Answer: As the sole surviving trustee, A must appoint a second trustee before completion. The buyer must pay the purchase price to both trustees to overreach any beneficial interests. If this is not done, the buyer risks being bound by the interests of B’s estate.
Investigation of Title: Practical Steps
When investigating title to co-owned property, the following steps are essential:
- Check the proprietorship register for a Form A restriction.
- Confirm the number of surviving legal owners.
- If only one remains and there is a Form A restriction, ensure a second trustee is appointed before completion.
- Obtain certified copies of any relevant death certificates or grants of probate.
- Ensure the transfer is executed by all trustees.
In unregistered land, similar principles apply. The conveyance to co-owners may state whether they hold as joint tenants or tenants in common. If the beneficial interest is held as tenants in common and one co-owner has died, a second trustee must be appointed before completion.
Key Term: good root of title
In unregistered land, a document at least 15 years old that deals with the whole legal and beneficial interest in the property, contains an adequate description, and does not cast doubt on the title.Key Term: assent
A document by which personal representatives transfer property to a beneficiary following the death of an owner.
Worked Example 1.3
The title to an unregistered property shows two owners as tenants in common. One has died. What must the buyer’s solicitor do to ensure good title?
Answer: The buyer’s solicitor must ensure a second trustee is appointed to join with the surviving co-owner in the conveyance. The purchase money must be paid to both trustees to overreach the beneficial interest of the deceased co-owner.
Restrictions and the Role of Personal Representatives
If the property is being sold by personal representatives (PRs) following the death of an owner, the buyer must check the grant of representation and ensure all PRs join in the transfer or assent. In registered land, PRs may be registered as proprietors. In unregistered land, the buyer must check for any prior dispositions and ensure the requirements of the Administration of Estates Act 1925 are met.
Summary
- The legal estate in co-owned property is always held as a joint tenancy; the beneficial interest may be a joint tenancy or tenancy in common.
- A Form A restriction indicates a tenancy in common in equity.
- Overreaching is essential to ensure a buyer takes free of beneficial interests; this requires payment to at least two trustees.
- If only one trustee survives, a second must be appointed before completion.
- In unregistered land, similar principles apply—ensure a good root of title and proper appointment of trustees.
Key Point Checklist
This article has covered the following key knowledge points:
- The distinction between joint tenancy and tenancy in common in co-ownership.
- The significance of a Form A restriction on the proprietorship register.
- The process and importance of overreaching in protecting buyers from beneficial interests.
- The need to appoint a second trustee if only one survives in a tenancy in common.
- The practical steps required in both registered and unregistered land to ensure a buyer acquires good title free of undisclosed interests.
Key Terms and Concepts
- joint tenancy
- tenancy in common
- Form A restriction
- overreaching
- good root of title
- assent
