Investigation of title - Co-ownership issues

Learning Outcomes

This article outlines the main legal and equitable issues in investigating title to co-owned property, including:

• Distinction between joint tenancy and tenancy in common
• Significance of restrictions on the register and the process of overreaching
• Practical steps to ensure a buyer acquires good title free from undisclosed interests
• Trusts of land arising automatically on co-ownership
• Maximum number of legal owners who can hold the legal estate
• Conditions for relying on overreaching to defeat beneficial interests (including interests protected by actual occupation)
• Circumstances in which a sole personal representative can validly overreach
• Evidence of severance in registered and unregistered titles
• Interpretation of Form A restrictions
• Appointment of additional trustees and the role of personal representatives on a sale
• Registered and unregistered title considerations in identifying joint tenancy or tenancy in common
• Application to SQE1-style scenarios

SQE1 Syllabus

For SQE1, you are required to understand co-ownership issues in title investigation, with a focus on the following syllabus points:

• 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
• recognise the maximum number of legal owners who can hold the legal estate and how this impacts conveyancing
• explain how actual occupation interacts with overreaching, and when a purchaser will still take free of equitable interests
• advise on sale by personal representatives and the circumstances in which a sole personal representative can overreach
• investigate co-ownership in unregistered land, including evidencing a good root of title and identifying joint tenancy or tenancy in common from conveyances

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. What is the main difference between a joint tenancy and a tenancy in common in relation to survivorship?
2. In registered land, what does a Form A restriction indicate about the beneficial ownership of a property?
3. What is overreaching and why is it important when buying from a sole surviving tenant in common?
4. 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.

A trust of land arises automatically whenever land is owned by more than one person. The people shown as registered proprietors hold the legal estate as trustees for those entitled to the beneficial (equitable) interest. Purchasers deal with the legal owners, but must ensure that any beneficial interests are either consented to or overreached so the buyer takes free. This requires close attention to restrictions on the proprietorship register, the identity and number of trustees, and whether capital money will be paid to at least two trustees (or a trust corporation).

Key Term: trust of land
A statutory trust that arises automatically when land is co-owned. The legal owners (trustees) hold the legal estate on trust for those entitled to the beneficial interest. The trust of land is governed by the Trusts of Land and Appointment of Trustees Act 1996 (TOLATA).

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. The legal estate may be held by a maximum of four trustees, all of whom must be over 18 and have capacity. If more than four names are inserted in a transfer, Land Registry will register the first four as legal owners; any additional people will hold a beneficial interest only.

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.

In equity, whether co-owners are joint tenants or tenants in common determines entitlement to sale proceeds and what happens on death. Indicators pointing to tenancy in common include unequal contributions to price, co-ownership for business purposes, or an express declaration of separate shares. Words of severance in historic conveyances (such as “equally”, “one half each”, “to be divided between”) demonstrate separate beneficial shares. By contrast, an express declaration of joint tenancy is strong evidence that the parties intended survivorship to apply.

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. The four unities (possession, interest, title, time) underpin the concept of joint tenancy in equity. If co-owners later agree or conduct themselves so that their beneficial interests are treated as separate, the joint tenancy may be severed, producing a tenancy in common.

Identifying the Type of Beneficial Ownership

A Form A restriction on the proprietorship register is the key indicator that the beneficial interest is held as tenants in common. Absent a restriction, assume the beneficial interest is a joint tenancy unless other evidence indicates otherwise (e.g., a filed declaration of trust stating shares).

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.

In practice:

• Check the proprietorship register for a Form A restriction and any filed declarations of trust.
• If the register is silent on the beneficial shares but circumstances suggest tenants in common (unequal contributions, business partners), seek evidence (e.g., declaration of trust) or advise clients to enter one on purchase.
• In unregistered land, read the operative parts of the conveyances and any recitals for words of severance or explicit declarations of trust.

Severance of Joint Tenancy

The beneficial joint tenancy can be severed, converting it into a tenancy in common. Severance can occur by written notice under section 36(2) Law of Property Act 1925, by mutual agreement, or through a course of dealing indicating that shares are to be treated as separate. Certain acts, such as bankruptcy, sale, or a contract to sell a beneficial share, may also sever. Severance does not affect the legal estate, which remains a joint tenancy.

Key authorities illustrate severance:

• Written notice is effective on delivery, even if not read (Kinch v Bullard).
• An enforceable agreement to divide beneficial interests can sever (Burgess v Rawnsley).
• Bankruptcy crystallises a share and severs as to equity (e.g., Re Gorman).

Severance affects survivorship: once severed, survivorship no longer applies in equity. On death, a severed share passes under a will or intestacy. For investigation of title, look for evidence of severance in prior dealings and any memoranda or declarations filed with the title.

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. Overreaching transfers beneficial interests from the land to the purchase money, so the buyer is not bound by them.

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.

Overreaching requires:

• A disposition under which capital money arises (e.g., a sale or mortgage of the legal estate).
• Payment of capital money to at least two trustees or a trust corporation.
• Compliance with section 27 Law of Property Act 1925.

This safeguard means that even beneficiaries in actual occupation can be overreached if the statutory conditions are met. A classic application is that a bank lending on a mortgage to two legal owners will take free of a beneficial occupier’s interest if capital money is advanced to both legal owners.

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. The appointment is usually made by deed under the Trustee Act 1925. Without appointment, a sale by a sole trustee will not overreach and a buyer may be bound by equitable interests (especially those coupled with actual occupation).

There is an important statutory exception: a sole personal representative can give a valid receipt for capital money and overreach on a sale by the estate under section 27(2) Law of Property Act 1925. This exception applies when the conveyance is executed by the personal representative in that capacity.

Key Term: personal representative
The person(s) entitled to administer a deceased’s estate: executors if appointed by will, or administrators if appointed under intestacy. Personal representatives take out a grant of representation (probate or letters of administration) and may transfer or assent property from the estate.

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 and their capacity to sell (maximum of four legal owners; all must be over 18).
• 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/letters of administration.
• Verify whether any declarations of trust are filed and consistent with the register.
• Inspect the property to identify any non-owning occupiers who may claim beneficial interests and could bind the buyer if overreaching fails.
• Raise enquiries of the seller regarding occupiers, contributions by third parties (which can indicate a beneficial interest), and any agreements affecting shares.
• Ensure the transfer is executed by all trustees and that capital money is paid to at least two trustees (or a trust corporation) to achieve overreaching.

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. Where documents are silent, earlier practice presumed joint tenancy unless there is evidence of severance. Always read the epitome of title for words of severance, any memorandum of severance, bankruptcy entries, or agreements suggesting separate shares.

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.

Pre-completion checks are important. In registered land, carry out Land Registry priority searches to check for changes since official copies were issued and to protect the buyer’s priority. In unregistered land, conduct appropriate searches (including an Index Map search) and ensure all necessary deeds in the epitome are properly stamped and executed. On any purchase where co-ownership and trusts are in play, confirm that arrangements are in place to pay capital money to two trustees or to a trust corporation.

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 (unless there is only one PR and the sale is by the estate, in which case that sole PR can give a valid receipt for capital money). In registered land, PRs may be registered as proprietors; otherwise, ensure the PRs have the authority to sell and that any estate debts and liabilities are considered. A buyer dealing with PRs will usually request sight of the grant of probate or letters of administration and evidence that there has been no prior disposal.

When investigating title on the death of a co-owner:

• Identify whether survivorship applied. If the beneficial interest was a joint tenancy, the deceased’s beneficial interest did not pass to their estate; the surviving co-owner(s) now own the whole beneficial interest as joint tenants unless severed earlier.
• If the beneficial interest was held as tenants in common (indicated by a Form A restriction or words of severance in the conveyance), the deceased’s share passes under their will or intestacy and PRs will administer that share. The legal estate remains with the surviving joint legal owners.
• If selling from a sole surviving trustee with a Form A restriction, ensure a second trustee is appointed so the buyer’s payment overreaches all beneficial shares. Alternatively, if the sale is by a sole PR of the deceased owner’s estate (for example, the deceased was the sole legal owner), section 27(2) Law of Property Act 1925 permits a sole PR to overreach by giving a valid receipt for capital money on a sale.

Key Term: personal representative
Executors or administrators responsible for gathering the estate, paying debts and distributing the residue under a will or intestacy. They hold the legal authority (via a grant of representation) to transfer, assent or sell estate property.

Practitioners must verify that PRs are properly appointed, obtain copy grants, and ensure appropriate execution of transfers or assents. If PRs are selling, overreaching will occur when capital money is paid to the PRs (a sole PR suffices). If PRs are not selling but a surviving trustee seeks to sell trust property subject to a Form A restriction, appointment of a second trustee remains necessary.

Worked Example 1.4

A and B buy a registered property in A’s sole name. B contributes to the price and lives at the property. A later mortgages to a bank without B’s knowledge. On investigation, the buyer’s solicitor discovers B is in actual occupation. Will a purchaser or lender be bound by B’s beneficial interest?

Answer:
If the mortgage advance or purchase price is paid to only one legal owner, there is no overreaching; a beneficiary in actual occupation may have an overriding interest binding the purchaser or lender. If capital money is paid to at least two trustees (or a trust corporation), beneficial interests will be overreached and the purchaser or lender will take free, even if the beneficiary is in actual occupation.

Worked Example 1.5

C dies owning a freehold house in sole name. D is the sole executor under C’s will and intends to sell. There is no Form A restriction. What must the buyer check to ensure the purchase is free of equitable interests?

Answer:
The buyer should obtain a copy grant of probate confirming D’s appointment, ensure D executes the transfer as personal representative, and pay capital money to D. Under section 27(2) LPA 1925, a sole personal representative can give a valid receipt and overreach equitable interests, so the buyer takes free.

Worked Example 1.6

E and F were registered proprietors. The proprietorship register contains no Form A restriction. F has died. The buyer’s solicitor sees that E alone proposes to sell and to receive the purchase money. Is this acceptable?

Answer:
Yes, provided the beneficial interest was a joint tenancy that has not been severed, survivorship applies and E owns the whole beneficial interest. The legal estate is held by the surviving joint tenant alone, so E can sell and receive capital money. The buyer should require F’s death certificate and check there is no evidence of severance (e.g., Form A restriction, filed declaration of separate shares, memorandum of severance).

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 (or a trust corporation).
• 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.
• Beneficiaries in actual occupation can bind a purchaser if overreaching does not occur; if capital money is paid to two trustees, their interests are overreached.
• A sole personal representative may give a valid receipt for capital money and overreach when selling from the estate.
• Look for evidence of severance (notice, mutual agreement, course of dealing, bankruptcy) because severance converts a beneficial joint tenancy into a tenancy in common without affecting the legal estate.
• The maximum number of legal owners is four; any additional co-owners hold only beneficial interests.

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.
• How actual occupation interacts with overreaching and when a buyer may be bound by a beneficiary.
• The role of personal representatives, including when a sole PR can validly overreach.
• Indicators of severance and their effect on survivorship and beneficial shares.
• The cap of four legal owners and why this matters in conveyancing.

Key Terms and Concepts

• joint tenancy
• tenancy in common
• Form A restriction
• overreaching
• trust of land
• good root of title
• assent
• personal representative