Five students, Betty, Allan, Charles, Edwina, and David, bought a house together. After the purchase, they all expressly signed that they hold the flat as joint tenants. In joint tenancy, each individual is entitled to the ownership of the property co-owned. Parties to the agreement do not have the right to turn out one of the tenants. Individual contributions towards the purchase of the property do not in any way affect one’s influence since all tenants have equal rights.1 For this reason, David is as much an owner of the flat as the other students despite having contributed just half the amount made by the other buyers. As a result, none of the five parties hold the legal estate since they are co-owners.
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All the five students hold equitable interests. Joint tenancy demands that all the owners should have equal rights to the estate. The beneficial interests for joint tenants are also similar. No single party can claim superiority over the other in terms of ownership.2 It is a fact that the other students contributed twice as much as David. However, they all hold the same equitable interests. To this end, all have 20 percent ownership over the estate. The courts will uphold this view if there is no proof of fraud or mistake during signing to declare the property as a joint tenancy.3
Allan dies two years after the purchase of the property. In his will, he leaves all the property to Freda, his wife. Consequently, it is assumed that Freda takes the beneficial interests of her husband in the co-owned property under the joint tenancy. However, this is not the case. Joint tenants have the right to survivorship. In this case, upon the death of one of the owners, their interests are shared equally among the surviving partners. None of the remaining co-owners can claim to hold the legal estate at the time. However, the equitable interests to the property will only be shared among the four individuals. Their equitable interests will, as a result, rise from 20 to 25 percent. Ultimately, the last survivor in the joint tenancy becomes the sole owner of the property having acquired all the rights.4
The interests of the deceased in this scenario are said to evaporate.5 Their heirs cannot claim the property under any circumstances. Freda cannot get anything from the joint tenancy held by her husband. The last survivor will, on the other hand, assume full ownership of the previously jointly owned property. As such, they become the legal holders of the estate. In addition, they assume 100 percent of the equitable interests to the property.6 In case of their death, they can pass on the property to their heirs.
The interests of joint tenants are protected by the right to survivorship. However, a living co-owner of such a property can give a notice to terminate the joint tenancy.7 Each and every member of the joint tenancy has a right to dispose of their rights to another party. As a result, such an individual loses their beneficial interests to the property. Such persons lose the right to survivorship. Betty, one of the five original purchasers of the flat, wants to severe her joint tenancy by selling her equitable interests to George. As such, her ownership with regards to the property is severed in equity.
Following Betty’s decision to severe the joint tenancy by disposing of her equity to George, the form of ownership to the property changes. The new possession structure will be tenancy in common. In this case, the property can be physically broken into four parts with each individual holding an equal share. Alternatively, the property may be sold and the proceeds shared out equally among the tenants. All the four tenants hold the legal estate. They each hold ¼ of this property. The equitable interests will also be shared equally among the tenants.8
Since the joint tenancy has already been severed, the right to survivorship among the co-owners is lost. As such, Harry has a right to take over David’s interests in relation to the flat. The property is now held as a tenancy in common. As a result, the law acknowledges that the four parties own separate and distinct portions of the common property.9 The co-owners have no restrictions on their rights to the asset during their lifetime. On the contrary, they may decide to sell it at their own will. In this case, Charles and Edwina indicate that they wish to sell the flat. George, on the other hand, wants to remain with the estate. In such a scenario, the court will not order the division of the flat into four physically distinct portions. The reason behind this is that the flat cannot be subdivided into four self sufficient parts.
Cap 352 of the Partition Ordinance gives clear directions on the interpretation of the law in case of conflicts of interest the sale of a co-owned property. The law focuses on joint tenancies and tenancy in common. The ruling made by the judge in such a case is based on a number of considerations. Such factors include the nature of the property, the number of co-owners interested, and disability among the shareholders. In this case, two parties (Charles and Edwina) are willing to sell their interests. It is only George who is opposed to the sale.
The number of parties interested in the transaction is larger than the one in the opposing camp. As a result, the court will rule in favor of the sale since the property cannot be partitioned. George should buy the interests of Charles and Edwina if he wishes to remain in the flat. As such, he will now own ¾ of the property. If he is not in a position to buy their interests, he should let them proceed with the plans to sell the estate. The proceeds will be shared out equally among the tenants in common.10
Cuckmere Brick Co. Ltd. v Mutual Finance (1971).
Ip Sau Shu v Sham Lai Hing (2003) 2 HKLRD 916.
Lai, L., Ho, D. and Leung, H., Change in Use of Land: A Practical Guide to Development in Hong Kong (Hong Kong: Hong Kong University Press, 2010).
Polyset Ltd. v. Panhandat Ltd. (2002) 20 FACV 70.
Roza, A. and Nield, S., Hong Kong Conveyancing and Property Law Handbook (Hong Kong: LexisNexis, 3rd Edition, 2007).
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Tse Kwong Lam v Wong chit Sen (1983) 3 All ER 54.
Williams v Hensman (1861) 1 J&H 546.
1 Williams v Hensman (1861) 1 J&H 546.
3 Goodman v Gallant.
5 Ip Sau Shu v Sham Lai Hing (2003) 2 HKLRD 916.
6 Lai, L., Ho, D. and Leung, H., Change in Use of Land: A Practical Guide to Development in Hong Kong (Hong Kong: Hong Kong University Press, 2010).
7 Ip V Sham, Supra.
8 Williams v Hensman, Supra.
9 Ip V Sham, Supra.
10 Williams v Hensman, Supra