Rights And Interests In Joint Property Ownership

This essay discusses the rights and interests of the parties involved in the case scenario, they being, Mirka, Piotr, Jacek, and Safe Bank Ltd. The discussion and analysis is based on the principles of land law.

With reference to the question on whether Mirka can ask Piotr and Radek to buy her share of the interest in the house, the issue that arises relates to the nature of the ownership. As per the principle laid down in Malayan Credit Ltd v Jack Chia-MPH Ltd, when individuals buy a property by contributing to the purchase price equally, the nature of the ownership is joint ownership. Joint tenancy involves the four unities of title, interest, possession and time. As Piotr, Mirka and Radek contributed equally towards the purchase price and the house was registered in their joint names, it can be assumed that the nature of the ownership is joint ownership. Because there is unity of title, interest, possession, and time, all of the owners own the property together as a whole. They do not have separate interests in the property. In the event that parties had separate interests in the property as tenants in common, each of them could have sold their individual interest to anybody else. However, in case of joint ownership, there are two options available to Mirka if she wants to vacate her share in the property: outright sale of property with consent of the other joint owners, or purchase of her share by the other joint owners. In that case, there will be a severance of joint ownership. Severance of joint ownership can be done through mutual agreement or a sale of the property share.

With respect to the will made by Radek for leaving his property to his cousin Jacek, the issue is whether the will is valid and whether Jacek gets Radek’s share in the property. Joint owners cannot dispose of their interest by making a provision in a will. Severance of joint ownership is done under Section 36(2) of LPA 1925 as per which a unilateral act of alienating share can have the effect of severing joint ownership. Joint tenancy can be severed by the joint tenant acting on their own share, provided that such act is final and irrevocable. This can be done through notice of severance served to joint tenants making the intent of the joint owner clear as to severing of their interest to immediately and effectively severe joint tenancy. Joint ownership creates equal rights of all joint owners with respect to the whole of the property and therefore, none of the joint owners can make a will to transfer ownership of the property to someone as severance of interest can only be inter vivos. This is an important point in the context of the present problem because a gift of the property or making of a will does not have the effect of severing joint tenancy because such an act is not inter vivos. The rule of jus accrescendi would apply in a case where a will has been made by one joint owner to vest their share of property in those joint owners who are surviving him. Applying this principle to Jacek, it is clear that the interest of Radek will go to the surviving joint owners as severance of interest cannot be done through will.

With regard to Safe Bank Ltd, the issue that arises is the action that can be taken on the interest mortgaged to Safe Bank by Mirka. Mirka has taken a loan from the bank and is now unable to make the payments. In this event, it can be considered that Mirka is bankrupt and the bank can approach the court to order the sale of the house. With regard to how this interacts with the joint ownership, there is already a severance of joint ownership by Mirka because she mortgaged the property. Joint tenancy is severed by the act of one joint owner in mortgaging their interest in the property. Moreover, bankruptcy too has the same effect of severance because it operates on share of the mortgagor and severs the joint tenancy. Even if the property has to be sold for the repayment of the loan, the mortgagee only has right to interest of the joint tenant’s interest and not at the interest of the other joint tenants. Applying these principles to the current situation, Safe Bank Ltd can use Mirka’s interest in the property for the repayment of the loan.

With regard to Piotr, the issue relates to his interest in the property after the severance by Mirka and Radek’s death. As joint tenants hold the property in four unities of title, interest, possession and time, Radek’s interest will now devolve on Piotr because the joint tenancy was not severed as between Piotr and Radek.

To conclude, Mirka’s act of mortgaging the property has the effect of severance of joint ownership. Safe Bank has the right to act on Mirka’s interest in the property to recover dues but cannot touch the shares of the other parties. After Radek’s death, his share devolves on Piotr because the will made to gift property by Radek is not a valid method of severance. Piotr being Radek’s joint owner in the property also survives to the share that Radek had in the property as per the principle of jus accrescendi.

Authorities

Alliance and Leicester plc v Slayford (2000) 33 HLR 743.

First National Bank v Achampong [2003] EWCA 487.

First National Securities Ltd v Hegerty [1985] QB 850.

Gould v Kemp (1834) 39 ER 959

Harris v Goddard [1983] 3 All ER 242.

Malayan Credit Ltd v Jack Chia-MPH Ltd [1986] AC 549

Re Draper's Conveyance [1969] 1 Ch 486, ChD.

Books

MacKenzie J, Textbook on Land Law (Oxford University Press 2016).

McFarlane B, Nicholas Hopkins and Sarah Nield, Land Law: Text, Cases, and Materials (Oxford: Oxford University Press 2015).