When acquiring property together with other people, there are two ways in which ownership can be shared: joint tenancy and tenancy in common. These concepts mostly arise in the context of shared ownership of real estate, but they apply to any sort of personal or property right. Co-ownership is to be distinguished from ‘concurrent interests’ which refers to different interests in the same property, i.e. the lessee of a house and the registered proprietor of that house have concurrent interests, and are not co-owners.
There are two main differences. Firstly, joint tenancies must be identical in every aspect, while joint tenancies need not be, i.e. joint tenants must have equal rights to the property, whereas tenants in common can share rights unequally.
The second main difference concerns the right of survivorship. When a joint tenant dies, his or her interest in the shared right ceases and the surviving joint tenant keeps the right for himself, in other words, the property interest of the joint tenant “grows”. When a tenant in common dies, his or her interest continues after death, and can be transferred to another person, either by the deceased’s Will or under principles of intestacy, if there is no Will.
It must be noted that if a deceased person’s property passes under the principles of intestacy, i.e. if someone has not made a Will, the Succession Act 2006 provides that the next of kin take their interest to the same property as tenants in common.
It is sometimes said that joint tenants are treated as a single owner. Each joint tenant’s share is a share to the property of the whole of the property and cannot be defined by a specific section of the property, or a percentage. They share the joint tenancy so completely that they cannot deal with their individual rights separately, unless the joint tenancy is converted into a tenancy in common.
Historically, corporations could not be joint tenants, because they cannot not die like a natural person. Section 25 of the Conveyancing Act 1919 and section 29 of the Property Law Act 1969 now enable corporations to be a joint tenant in the same manner as an individual.
In contrast, tenants in common can deal with their share separately. Their share can be sold or given away without destroying the tenancy in common.
Creation of Joint tenancy – Four Unities
In order for a joint tenancy to be created, four requirements, commonly referred to as the “four unities”, have to be met:
- Possession: both co-owners must have possession of the property as a whole. For example, you cannot agree to exclusively occupy one section of the house that you co-own as joint tenants, and have the other co-owner occupy the other section. You must occupy the house as a whole, not just specific sections.
- Interest: both co-owners must have equal shares of the same nature, extent and duration. Any words that specify shares will point to a tenancy in common.
- Title: both co-owners must take their interest under the same document, or by virtue of the same act.
- Time: both co-owners must take their interest at the same time, except when they take their interest under a Will or it is a beneficial interest under a trust. For example, if I execute a Deed to the effect that my children are to take an interest as joint tenants when they turn 18 (and obviously, they will not turn 18 at the same time!) they cannot take their interest as joint tenants.
There must also be evidence of an intention for the right of survivorship to apply. Therefore, it must be determined whether the co-owners were intended to take an interest which was to form part of their own estate, or whether it was intended that the deceased co-owner’s share would go to the surviving co-owner.
If these requirements cannot be met, a tenancy in common will be created instead, subject to the requirements set out below.
Creation of tenancy in common – requirements
Even though the ‘four unities’ do not apply to tenancy in common, certain requirements will still need to be met. One of the most important requirements is that there must be an intention to form a tenancy in common. The intention can be express or implied.
Intention will be express if ‘words of severance’ are used in the instrument of transfer. For example, it might say “I give my property to A and B as joint tenants (which points to joint tenancy) in share and share alike (words of severance)”. Words of severance will point to a tenancy in common. If there is no intention for a property to be co-owned, the property cannot be co-owned at all.
The co-ownership must also concern possession of the same property, and not physically distinct shares of the property. For example, if there are two buildings on a property and one tenant in common has possession of one, and the other tenant in common has possession of the other, it will not be a co-ownership. Each of the buildings will be owned separately.
If the parties’ intentions were ambiguous, historically the law imposed a presumption in favour of a joint tenancy. This has been partly overridden by section 26 of the Conveyancing Act 1919, which imposes a presumption that the co-ownership is a tenancy in common, unless the co-owners are trustees.
Unequal contributions to purchase price
Even if it is clear the co-ownership is a joint tenancy at law, equity might impose a trust to the effect that the parties hold their interest as tenants in common, if the parties contributed unequally to the purchase price (Ryan v Dries (2002) 10 BPR 19).
Similarly, when there is no co-ownership at law and there is only one legal owner of a property, equity might impose a resulting trust when someone else has contributed to the purchase price. This was the case in Delehunt v Carmody (1986) 161 CLR 464, whereby the property was legally owned by the husband, but the wife had contributed to the purchase price. The result was that a resulting trust arose, and accordingly, the wife was equitable joint tenant for the proportion of the share of her contribution to the purchase price.