Co-ownership - Rule of survivorship

Learning Outcomes

This article explains the Rule of Survivorship in co-ownership and when it applies or is displaced; distinguishes joint tenancy and tenancy in common in law and equity by reference to the four requirements, express declarations, and words of severance; analyzes statutory and equitable methods of severance, including written notice under s.36(2) Law of Property Act 1925, service rules under s.196 LPA 1925, acts operating on a party’s own share (sale, mortgage, bankruptcy), mutual agreement and mutual conduct, and the effect of unlawful killing; evaluates the consequences of severance for shares, occupation, and succession, including the commorientes presumption under s.184 LPA 1925; discusses dispute resolution under TOLATA 1996, including s.14 applications, s.15 factors, and interactions with insolvency and mortgage creditors; and outlines overreaching principles and restrictions in registered land to protect or defeat beneficial interests.

SQE1 Syllabus

For SQE1, you are required to understand co-ownership and the Rule of Survivorship, with a focus on the following syllabus points:

• the distinction between joint tenancy and tenancy in common in law and equity
• the four requirements and their role in identifying joint tenancies
• the operation and legal effect of the Rule of Survivorship (jus accrescendi), including s.184 LPA 1925
• statutory and practical methods of severing a joint tenancy (s.36(2) LPA 1925; s.196 LPA 1925 service; acts operating on own share; mutual agreement/conduct; bankruptcy; unlawful killing)
• the consequences of severance for shares, occupation and succession (Goodman v Gallant principles)
• TOLATA 1996 framework: trustees’ powers and duties, s.14 applications, s.15 factors
• overreaching and the role of restrictions in registered land; interaction with LRA 2002 overriding interests
• how to apply these principles to SQE1-style problem questions

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 Rule of Survivorship and to which form of co-ownership does it apply?
2. How can a joint tenancy in equity be severed, and what is the effect of severance?
3. What happens to a joint tenant’s share in a property if they die after severance has occurred?
4. Which statutory provision governs the severance of a joint tenancy in equity by written notice?

Introduction

Co-ownership arises when two or more people hold rights in the same property at the same time. The Rule of Survivorship is a defining feature of joint tenancy, determining what happens to a co-owner’s interest on death. Understanding this rule, alongside the ways survivorship can be displaced by severance or statute, is essential for advising on succession, sale, occupation and creditor claims in co-ownership scenarios.

Key Term: joint tenancy
A form of co-ownership where all co-owners are equally entitled to the whole property, with no distinct shares, and the right of survivorship applies.

Key Term: tenancy in common
A form of co-ownership where each co-owner holds a distinct undivided share in the property (equal or unequal), and there is no right of survivorship.

Key Term: four requirements
The requirements for a joint tenancy in equity: requirement of possession, requirement of interest, requirement of title and requirement of time.

Types of Co-ownership

There are two principal forms of co-ownership: joint tenancy and tenancy in common. In practice:

• the legal estate must be held as a joint tenancy and cannot be severed (s.1(6) Law of Property Act 1925)
• the beneficial interest can be held as a joint tenancy or a tenancy in common and can be severed in equity

The beneficial form is identified by the four requirements and any express declaration or words of severance.

The Four Requirements

A joint tenancy can only exist in equity if four requirements are present:

• Possession: Each co-owner is entitled to possess the whole property (no physical division). Requirement of possession is required for both joint tenancy and tenancy in common.
• Interest: Each co-owner has the same type and duration of interest (e.g. identical freehold or identical leasehold interests).
• Title: All co-owners acquire their interest from the same document or act. Separate documents may suffice if, in substance, the same grant is made to them together.
• Time: All co-owners’ interests begin at the same time.

If any requirement is missing, the equitable co-ownership will be a tenancy in common. Where there is an express declaration in the transfer stating the beneficial ownership (e.g. “as joint tenants” or “as tenants in common in equal shares”), this is usually conclusive. Words of severance such as “in equal shares”, “to be divided between” or “equally” indicate a tenancy in common.

Key Term: Rule of Survivorship
The principle that, on the death of a joint tenant, their interest passes automatically to the surviving joint tenant(s).

The Rule of Survivorship (Jus Accrescendi)

The Rule of Survivorship means that when a joint tenant dies, their interest passes automatically to the surviving joint tenant(s). The deceased’s beneficial share does not form part of their estate and cannot be left by will or pass under intestacy rules. The rule only applies to joint tenancies, not to tenancies in common. In a tenancy in common, each co-owner’s share passes according to their will or the intestacy rules.

The presumption where order of death cannot be ascertained is governed by statute.

Key Term: s.184 Law of Property Act 1925
If two or more persons die in circumstances where the order of death is uncertain, the younger is deemed to have survived the elder. This can determine survivorship between joint tenants where the sequence of death is unclear.

Worked Example 1.1

Three siblings, A, B, and C, own a house as joint tenants in equity and law. A dies. What happens to A’s interest?

Answer:
A’s interest passes automatically to B and C as surviving joint tenants. A’s will or intestacy is irrelevant for this property.

Worked Example 1.2

Two joint tenants, D (aged 70) and E (aged 68), die together in an accident with no evidence of who died first. Who is deemed to survive, and what is the effect?

Answer:
Under s.184 LPA 1925, the younger (E) is deemed to have survived the elder (D). D’s interest accrues to E by survivorship; E’s estate then takes the whole (subject to any further co-owners).

Severance of Joint Tenancy

Severance is the process by which a joint tenancy in equity is converted into a tenancy in common. Severance destroys the right of survivorship for the severed share. The legal estate must always remain a joint tenancy (s.1(6) Law of Property Act 1925), but the beneficial interest can be severed.

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

Methods of Severance

Severance can occur in several ways. The most used formal method is statutory written notice; other equitable methods include acts by a co-owner and mutual dealings:

• Written notice (statutory): Any joint tenant may serve written notice of intention to sever on the other joint tenants (s.36(2) Law of Property Act 1925). The notice must evince an immediate intention to sever and be served effectively.

Key Term: s.36(2) Law of Property Act 1925
Allows severance of a beneficial joint tenancy by written notice given by one joint tenant to all the others, expressing an immediate desire to sever.

Key Term: s.196 Law of Property Act 1925
Statutory rules for service of notices. A notice can be served by leaving it at the last known place of abode or business, or by registered post; if properly addressed, it is deemed served when delivered, even if not read.

• Unilateral act operating on one’s own share: For example, entering a specifically enforceable contract to sell the beneficial interest, creating an equitable mortgage, or bankruptcy. Such acts demonstrate treating the share as separate.
• Mutual agreement: All joint tenants agree to sever, even if the agreement is not in writing or specifically enforceable.
• Mutual conduct/course of dealing: The parties’ conduct demonstrates they treat their interests as separate shares (e.g. negotiations and dealings consistent with separate ownership).
• Bankruptcy: Bankruptcy of a joint tenant severs the joint tenancy by operation of law; the bankrupt’s beneficial interest vests in the trustee in bankruptcy.
• Unlawful killing: If a joint tenant unlawfully kills another, survivorship is denied for public policy reasons; the killer cannot benefit, and severance is treated to prevent accrual.

Service and intention: practical points

• The notice must convey an immediate desire to sever (not merely to sever in the future upon an event). A divorce petition alone is insufficient if it does not show immediate intent.
• Service under s.196 LPA 1925 is technical. Leaving at the last known address or sending by registered post can be effective even if the recipient does not read the notice. Once validly served, a notice cannot be revoked to prevent severance by attempting to intercept or destroy it.

Worked Example 1.3

Four friends own a flat as joint tenants. One serves a written notice of severance on the others. What is the effect?

Answer:
The serving joint tenant’s interest becomes a tenancy in common. The remaining three continue as joint tenants between themselves for the rest.

Worked Example 1.4

X and Y are joint tenants in equity. X posts a notice of severance by recorded delivery to Y’s last known address. Y never opens the letter and it is later destroyed. Has severance occurred?

Answer:
Yes. If the notice meets s.36(2) (immediate intention) and is effectively served under s.196 LPA (e.g. delivered by recorded post to the last known address), severance takes effect on service even if the recipient does not read the notice.

Worked Example 1.5

Two joint tenants, P and Q, discuss Q selling her “half” to P. They agree a price but never sign anything, and negotiations collapse. P dies unexpectedly. Has the joint tenancy been severed?

Answer:
Depending on the facts, severance may be found either by mutual agreement (if they had agreed to sever) or by mutual conduct (where dealings demonstrate treating interests as separate). If severed before death, survivorship would not apply to P’s share.

Worked Example 1.6

R, a joint tenant, enters into a specifically enforceable contract to sell her beneficial interest to S. What is the effect on the joint tenancy?

Answer:
The contract is an act operating on R’s own share and severs the beneficial joint tenancy as to R’s interest. R becomes a tenant in common with a distinct share; the other joint tenants remain joint tenants of the remainder.

Exam Warning

In problem questions, always separate the legal estate from the beneficial interest. Only the beneficial interest can be severed; the legal estate must remain a joint tenancy. When considering severance by notice, check for immediate intention and effective service (s.196 LPA 1925).

Consequences of Severance

After severance, the right of survivorship no longer applies to the severed share. That share will pass under the severed co-owner’s will or intestacy. The remaining joint tenants continue to hold their shares as joint tenants unless and until further severance occurs.

As to the size of shares, if there is no express agreement or declaration, the default position is that severed shares are equal, regardless of initial contributions. An express declaration of shares will prevail over this default.

Post-severance:

• the severing party holds a distinct undivided share as a tenant in common
• survivorship does not operate over that share on death; it forms part of the estate
• the other joint tenants remain jointly entitled to the remainder until further severance
• occupation and sale disputes become subject to TOLATA 1996 rules

Worked Example 1.7

A, B, and C own a property as joint tenants in law and equity. A severs their share. Later, A dies. What happens to A’s share?

Answer:
A’s share passes under A’s will or intestacy as a tenant in common. B and C remain joint tenants as to the remaining shares.

Worked Example 1.8

Two co-owners are joint tenants in equity. One unlawfully kills the other. Does survivorship apply?

Answer:
No. Public policy prevents the killer from benefiting. The joint tenancy is treated as severed to prevent accrual; the victim’s share passes under the victim’s estate.

Statutory Framework

The Law of Property Act 1925 and the Trusts of Land and Appointment of Trustees Act 1996 (TOLATA) provide the core statutory rules for co-ownership, survivorship and severance.

• LPA 1925, s.1(6): the legal estate cannot be held in undivided shares; it must be a joint tenancy and cannot be severed
• LPA 1925, s.36(2): severance of beneficial joint tenancy by written notice
• LPA 1925, s.196: service rules for notices
• LPA 1925, s.184: presumption of younger surviving elder where order of death is uncertain
• Trustee Act 1925, s.34(2): maximum of four trustees
• TOLATA 1996: trust of land arises automatically where land is co-owned; trustees’ powers, duties to consult, and court jurisdiction

Key Term: TOLATA
The Trusts of Land and Appointment of Trustees Act 1996, which governs the powers and duties of trustees and beneficiaries in co-ownership, including court jurisdiction to resolve disputes.

Under TOLATA:

• trustees have all the powers of an absolute owner (s.6), but must consult beneficiaries of full age with interests in possession and consider their wishes, so far as consistent with the general interest of the trust (s.11)
• any trustee or person with an interest in property subject to a trust of land may apply to the court for orders relating to trustees’ functions or declarations of interest (s.14)
• the court must have regard to specified factors when exercising powers under s.14 (s.15)

Key Term: overreaching
A mechanism by which certain equitable interests (e.g. beneficial interests under a trust of land) are detached from the land and transferred to the purchase money where it is paid to a minimum of two trustees or a trust corporation. A purchaser then takes free of those interests.

In registered land, a restriction on the title can be used to control dispositions (e.g. requiring consent) and prevent overreaching unless conditions are met. Otherwise, if purchase money is paid to at least two trustees, overreaching will occur and beneficiaries’ interests attach to the proceeds rather than bind the land.

Key Term: s.36(2) Law of Property Act 1925
The statutory provision allowing severance of a joint tenancy in equity by written notice.

Key Term: s.196 Law of Property Act 1925
The statutory provision setting out how notices (including severance notices) may be served effectively.

Succession and the Rule of Survivorship

The Rule of Survivorship can have significant consequences for succession planning. If co-owners wish to leave their share to someone other than the surviving co-owners, they must sever the joint tenancy before death. Otherwise, the share will pass automatically to the survivors, regardless of any will.

The s.184 LPA 1925 presumption may determine survivorship where deaths are simultaneous or the order is uncertain. This can alter who ultimately takes the property under survivorship and then under the deemed survivor’s estate.

Severance also affects creditors and family claims. After severance, the severed share may be reachable by the co-owner’s creditors and will be subject to succession rules. In insolvency, different considerations apply under separate legislation (e.g. Insolvency Act 1986 s.335A).

Revision Tip

If a client wants their share in a co-owned property to pass to someone specific, advise them to sever the joint tenancy and make a will. If there is any risk of simultaneous death (for example, shared travel), consider how s.184 LPA 1925 might affect outcomes.

Disputes and Severance

Disputes may arise if one co-owner wishes to sever or sell, and others do not, or if occupation is contested. Under TOLATA 1996, any co-owner, trustee or person with an interest may apply to the court under s.14 for orders relating to the property, including for sale, regulation of occupation, or declaration of shares.

When exercising its discretion, the court must consider s.15 factors:

• intentions of the person(s) who created the trust
• the purposes for which the property subject to the trust is held
• the welfare of any minor who occupies or might reasonably be expected to occupy the land as a home
• the interests of any secured creditor of any beneficiary
• and, under s.15(3), the circumstances and wishes of adult beneficiaries with interests in possession (the majority by value prevails)

Court decisions emphasise that where the original purpose (e.g. as a family home) is ongoing, sale may be refused; where that purpose has failed (e.g. relationship breakdown and no dependent children), sale is more likely. Secured creditors are given considerable weight, especially where debts are mounting and equity is at risk.

Worked Example 1.9

Two friends own a house as joint tenants. One wishes to sell, but the other does not. What can be done?

Answer:
Either co-owner may apply to the court under s.14 TOLATA for an order for sale or other appropriate order. The court will consider s.15 factors, including the original purpose of acquisition, any minors’ welfare, and the interests of secured creditors.

Key Point Checklist

This article has covered the following key knowledge points:

• The Rule of Survivorship applies only to joint tenancies, not tenancies in common.
• On the death of a joint tenant, their interest passes automatically to the surviving joint tenants; wills and intestacy do not apply to that property.
• s.184 LPA 1925 presumes the younger survived the elder where order of death is uncertain, which can determine survivorship outcomes.
• Severance converts a joint tenancy in equity into a tenancy in common, ending the right of survivorship for that share.
• Severance can occur by written notice (s.36(2) LPA 1925) served under s.196 LPA 1925, by acts operating on one's own share (sale/mortgage/bankruptcy), by mutual agreement or mutual conduct, and by unlawful killing.
• After severance, the severed share passes under the will or intestacy of the deceased co-owner; absent express shares, severed shares are generally equal.
• The legal estate must always be held as a joint tenancy; only the beneficial interest can be severed.
• Under TOLATA 1996, trustees have powers akin to an absolute owner but must consult beneficiaries; disputes can be resolved under s.14 by reference to s.15 factors.
• Overreaching protects purchasers who pay to at least two trustees; beneficiaries’ interests transfer to the proceeds. Restrictions can be used to control dispositions and protect equitable interests where appropriate.
• Bankruptcy of a joint tenant severs the beneficial joint tenancy; secured creditors often carry strong weight in s.14 applications.

Key Terms and Concepts

• joint tenancy
• tenancy in common
• four requirements
• Rule of Survivorship
• severance
• s.36(2) Law of Property Act 1925
• s.196 Law of Property Act 1925
• s.184 Law of Property Act 1925
• TOLATA
• overreaching