Co-ownership

572Property Law

and other manifestations not normally recognised as such, including membership of unincorporated associations and public trust doctrine.

16.2.The classical approach to co-ownership: joint tenancies and tenancies in common

16.2.1. Basic concepts

Lawson and Rudden give a broad overview of the essentials of co-ownership in the following extract.

Extract 16.1 F. H. Lawson and B. Rudden, The Law of Property (3rd edn, Oxford: Clarendon Press, 2002), pp. 92–7

Ownership of the same thing at the same time and in the same way by a number of persons has been general from very early times. Indeed, some students of very early law think that ownership by communities such as families, tribes, or households preceded ownership by individuals. Roman law admitted common ownership and it has survived everywhere in one form or another. Everyday examples in English law are found where domestic partners together own their home, its furnishings, and the ‘family car’, or where commercial partners run a business. In such situations the law regulates both internal and external relations. It must handle the rights of the co-owners among themselves; and at the same time it needs to facilitate transactions so that third parties can simply and safely acquire, or lend money on the security of, the whole thing, or the rights of one of its co-owners.

In English law today there are two kinds of co-ownership, in accordance with which two or more persons enjoy what are called concurrent interests. They are respectively joint ownership and ownership in common. The reader needs to be warned, however, that for historical reasons they are often called ‘joint tenancy’ and ‘tenancy in common’. In this context, the expression has nothing to do with leases . . . [The] word tenancy comes from Latin via French and means ‘holding’.

OWNERSHIP IN COMMON

The difference between joint owners and owners in common is that each of the latter owns an individual asset, a separate but not separated share in the asset held in common. Traditionally, it is called an ‘undivided’ share: this rather puzzling name means that, while the share itself is of course separate from the others, it does not entitle its owner to a particular physical part of the asset. But the ‘undivided’ share can be alienated (without needing the consent of the other co-owners) and will pass by will or on intestacy. The simplest way to grasp the idea is to think of shares in a company. The shareholders each have a separate thing which they can alienate or leave to pass on death, but none of them can go to the company’s head office, point at a particular room and say ‘I claim my share’ (all the shareholders acting together would have to wind up the company – the legal person – and pay its debts before they could

574 Property Law

representatives of the deceased and then had to be separated from the private assets. Consequently, they always hold the trust assets jointly. Any attempt to sever and turn their holding into an undivided share would not work, so a trustee who dies simply drops out. If there is only one left, another is commonly appointed so that the trust property never devolves on the death of a trustee. Indeed, by a nineteenth-century statute, a human being can be joint trustee with a company, although it is virtually certain that the latter will outlive the former.

Any property may be held by concurrent owners. Partners, for instance may well be owners in common – that is, have separate shares in – the goodwill of their business, debts due to it, patents, copyrights and the like. Tangible moveables may be held in a similar way – racehorses owned by a syndicate are one example. A commercial example is to be found in the ownership of fungibles held in bulk, such as oil or grain aboard ship. By a fairly recent reform of the law on sale of goods, a buyer of goods which form part of an identified bulk owns a share in the bulk proportionate to the amount bought and paid for: so if that is 10 per cent at the time of purchase and the ship then unloads, for other consignees, half of the bulk, the buyer’s share will be 20 per cent of the remainder.

Whether holding jointly or in common, all concurrent owners are entitled to possess and use the property. If it produces an income, say by being leased, they share the rent equally or, if they hold in common, in proportion to their holdings. To alienate the property they must, in principle, all agree, and must all concur in physical division. This is fair treatment among the co-owners, but can give rise to holdout problems and to disputes whose resolution might be very costly in comparison with the value of the thing owned. Consequently, in the case of chattels, the Law of Property Act 1925 (section 188) gives the court power to overcome a deadlock and to override the wishes of a minority interest. For land it laid down a different system, since amended, and explained below.

The two categories of co-ownership outlined above are exhaustive and mutually exclusive. They are exhaustive, in that nowadays they are the only two types which remain, older varieties having been long abolished in England and Wales. They are mutually exclusive, in the sense that the same people cannot at one and the same time have both joint and common entitlements to the enjoyment of property: the rule for joint holding – that the survivors take – is entirely incompatible with the rule for holding in common – that the deceased’s estate takes. Because of this, when something is transferred to co-owners, it is important to know whether they are to hold jointly or in common. In most cases, of course, the transfer will make it clear: ‘to A and B in equal shares’; or ‘to A and B jointly’. But where it is unclear, and the transfer says only ‘to A and B’, the law needs default rules which, in the absence of any other indication, can be applied to solve the problem. The main ones are as follows:

1 If A and B are trustees, they take jointly.

2If A and B are business partners, they take in common beneficially, though they will be joint managers of the business and joint holders of its assets.