Co-Ownership – McMahon Legal (Solicitors) (2024)

Nature of Co-Ownership

Co-ownership arises where more than one person owns the same estate, interest or title in land. Together, the co-owners own the estate in land collectively. There are two principal forms of co-ownership, namely joint tenancy and tenancy in common. In this context, the use of the word tenancy does not imply that the owners hold as tenants or lessees. Freehold co-owners are described as joint tenants or tenants in common.

The most significant practical distinction between them is that the so-called right of survivorship attaches to a joint tenancy. This means that on death, that the other joint owners automatically acquire ownership of the deceased’s joint owner’s share. In contrast, on the death of a tenant in common, his share in the property passes to the persons entitled to his assets on death (described in his or under the rules of intestacy). Where two joint tenants die simultaneously, for example in an accident, then they are deemed to have held their shares as tenants in common in equal shares immediately prior to death.

Prior to the recent Conveyancing Act, the owner of a joint tenancy could sell his or her interest and thereby sever it. Severance of a joint tenancy means that it is transformed into a tenancy in common. A major change made by the recent legislation is that severance generally requires the consent of all joint owners.

A company can be a joint tenant so that it potentially continue forever and succeed inevitably to the estate.

Co-Owners’ Rights

Co-owners must generally act collectively in relation to the property. Each co-owner is entitled to use and occupy the entire property. Any co-owner is entitled to enjoy the whole of the property. If, however, the co-owner uses it to such an extent as to effectively make it unavailable to the other co-owner, then this might amount to an unlawful ouster of the latter.

The fact that a co-owner may enjoy the lands, to the extent short of ousting his co-owners may operate unfairly on co-owners. Co-owners sometimes owe each other fiduciary duties by reason of being partners, so that that they have to account to each other for benefits from sole use of the property.

The recent land law reforms make provision for an application to the court, by which a co-owner can apply for an adjustment, which requires that a co-owner who has benefited, is required to account to his follow co-owners for the benefit received. Apart from this, a co-owner may ultimately apply to the court for an order for sale, if his co-owners act unreasonably.

Creation of Joint Tenancy

Certain conditions apply in relation to the manner in which a joint tenancy is created. The joint owners must acquire their ownership in a single collective grant. There must be so-called unity of possession, unity of interest, unity of title and unity of time. The ownership must be created at the same time without specifying any share.

Each joint owner must have the same “interest” in the land. One cannot, for example, have leasehold interest while another has a freehold interest. There is an exception whereby both have the same interest, but one has an additional interest. Joint owners, by definition, are entitled to the property equally. None may own a distinct share. On sale, the sale proceeds are divided equally.

Joint owners must acquire title by the same deed, will or possession. Generally, when persons acquire ownership by possession against the “true” owner, they acquire as joint owners. This will commonly occur when a grant of probate is not taken out upon the death of a family member. After a certain period, it will be too late for other beneficiaries to claim title against the persons in possession of the deceased’s property.

Joint tenants must have taken their interest at the same time. In contrast with joint tenancy, tenants in common each have a separate share. The only unity is so-called unity of possession.

Tenancy in Common

A tenancy in common may arise if one of the above-mentioned unities (possession, interest, title or time is absent. Certain wording in the deed or document creating the interest is presumed to create the tenancy in common. Any wording which suggests a particular share implies a tenancy in common.

The shares of tenants in common need not be equal. If the shares were unequal, then a tenancy in common would definitely exist. However, it is possible and indeed very common to have tenants in common in equal shares. A transfer to A and B might be presumed to be a joint tenancy. However, a transfer to A and B in equal shares would be presumed to a tenancy in common in equal shares.

Legal and Beneficial Co-Ownership

The law in relation to co-ownership must be considered from the perspective of the distinction between legal and equitable ownership. It is possible to have legal joint tenants but equitable tenants in common. Indeed it is common for trustees to be joint owners (being bare legal owners), while the beneficiaries hold their shares as tenants in common.

Legal joint owners may hold the property in trust for themselves as tenants in common in particular shares. This would mean, that as regard third parties, they would appear to be joint owners, but they must account for each other for their respective shares as tenants in common. In this case, where the co-owner dies, the legal owners will take the legal title to the property by surviving, but they must account to the personal representatives of the deceased owner in common in respect of his tenant in common share.

The Courts of Equity (dealing with equitable interests) were more flexible and concerned with fairness than the Courts of Law (dealing with legal interests). They were accordingly more willing to find an intention to create a tenancy in common, where the application of joint ownership rules would be anomalous. The equitable rules were given priority when the Courts of Equity and Law merged.

Contributions to Purchase Price

There is no presumption of tenancy in common, but there is a preference for it, where this accords with the economic interest of the parties. Where purchase monies are provided in different shares by unrelated parties in a commercial setting, it is presumed that the parties are tenants in common in equity in the respective shares, even if they are joint tenants at law (i.e. on the face of the deed or Register).

There is a general presumption of a tenancy in common as to the equitable (beneficial) interests, where the purchase monies were provided unequally by unrelated parties. The courts presume that each was to enjoy the property, in shares proportionate to his contribution.

This presumption can be displaced where it can be presumed that one party intended to benefit the other. This would usually be the case, where a married couple purchase property together. The presumption can also be rebutted in where there is a prior relationship between the parties, by which one owes duties and obligations to the other. Parents have duties to maintain and provide for their children.

In the above cases, the presumption is that there was an intention to hold the property as joint owners, notwithstanding the unequal contributions. Historically, it was assumed that the husband wished to benefit his wife but not vice versa. This is likely to be no longer applicable in view of the Constitution and modern circ*mstances each spouse is bound to maintain the other.

Where partners purchase assets, there is a presumption that the property is to be held as tenants in common as between themselves. This reflects their underlying commercial relationship. The partnership agreement or Partnership Act will determine their proportionate shares. In a partnership, one person may hold the legal title but may in effect hold it as partnership property, in accordance with their rights as partners.

Severance of Joint Tenancy

Severance of a joint tenancy happens when it is converted into a tenancy in common. Once severed, the joint tenancy becomes a tenancy in common and the right of survivorship ceases to apply. Once severed, a tenancy in common may not be reconverted into a joint tenancy without being re-granted.

A significant change was made by the recent land law reforms in relation to severance It is no longer possible to sever a joint tenancy without the consent of the other owner. A contract or conveyance by one joint owner, without the consent of the others, is effectively void. This reflects a policy that a joint ownership should be an arrangement which cannot be terminated unilaterally.

Upon registration of judgment mortgage against a joint tenant, the joint tenancy is not severed. As the joint tenancy remains un-severed, the judgment mortgage terminates on the death of the owner against whom the judgment mortgage is registered.

The parties may agree that the ownership is severed in a way that is not formally recorded in writing. As with other property transfer where partiesact in the basis of an agreement and it would inequitable on account of a change of position not to enforce it, effect may be given now to son in the lack of formality. However, severance may also be found where there isn’t an agreement to sever. The recent landlord reform legislation preserves the possibility.

Parties may be shown to have severed the joint tenancy by their conduct. If the parties act as if the joint tenancy no longer exists by a course of dealing, the courts may infer that a severance has taken place in equity. Indeed, the courts may always find that a legal joint tenancy is in fact held as a beneficial or equitable tenancy in common.

If the other joint tenant does not grant consent to severance, it is possible to apply to the court to have the consent dispensed with. Indeed it is always possible to go to court to seek partition and sale of the property, as mentioned below.

Termination of Co-ownership

Partition is the division of the property. It terminates co-ownership. The joint owners could partition the property by agreement. One co-owner cannot partition the property without the consent of the other. One owner can not force a sale of the entire property without the consent of all. A co-owner can apply to the court for an order a sale in lieu of partition. An application could be made to the court for a partition and/or sales. Courts have the discretion to refuse a sale.

The High Court or Circuit Court may resolve questions in relation to the sale of a co-owned property. An application may be made for partition, sale and/or for an order to account for adjustments of entitlement between owners. This gives the co-owner an ultimate means of realising the value of his share in the property, particularly, if he is excluded, by his co-owners.

An application may also be made to dispense with consent to severance of a joint tenancy, on the basis that it is unreasonably withheld. The court may make an order with conditions. The applications may be made by a person having an interest in the property. This includes a mortgagee or creditor.

Commonage refers to land typically held in common for pasturage right. Applicants holding land in common may apply to the Department of Agriculture for preparation of a scheme of partition. An appeal lies to the High Court.

Number of Co-Owners

In principle, it is possible to have as many co-owners as parties decide to create. In contrast, under English Law, it is possible to have a maximum of four legal owners. All other ownership must be under a trust.

When the Irish laws were revised in 2009, no equivalent restriction was imposed.In Ireland, many investment structures in property based investments were by a way of co-ownership agreement. It was thought desirable to maintain the possibility of having numerous legal co-owners without restriction.