Co-ownership

Rights and duties of co-owners

VLRC Disputes Between Co-owners Final Report (2002)

VLRC Report 4.73: The Recommendations outlined above contemplate that VCAT should only have power to make orders for compensation when an application is made for division or sale of the property. Limiting the availability of these remedies to the situation when co-ownership has come to an end prevents a co-owner who has spent money on the property calling on the other co-owner(s) to contribute to expenditure to which he or she has not agreed, until the value of the property is realised. It also prevents a claim being made for occupation rent for the purpose of forcing a coowner out of possession of the property. When hearing an application for sale or division of the property, VCAT would also be able to make orders which take account of any damage caused by a co-owner’s unreasonable use of the land.

Severance by notice: should this be reformed?

By an act operating on own share a JT can unilaterally sever. The co owners can collectively sever by agreement/course of conduct. Arguably there is another cateogory of severance by unilateral

1990 case Corin v Patton: Mrsw Patton was terminally ill and knew it. She wanted to sever the JT of a property she held with her husband as she wanted to give the property to someone other than her estranged husband. She executed a transfer of her itnereswt to her brother Corin. It was intended he register the tfr and become TiC with the husband. Mrs Patton died before the tfr was registered.

Q: had the JT been severed in equity?

• Had not been by alienation at law

• Alientation in equity? Do this in Equity unit later.

• Mutual agreement/course of dealing? No – Mr Patton had not agreed’

• Brother argued 4^th type: sevareance could be achieved by any act that was inconsistent with continuation of the JT; eg a unilateral act

  • HCA rejected the argument: unilateral intention not sufficient. It is not an alienation or agreement. Also to effect a severance you have to show one of the four unities is destroyed and mere statements of intention do not affect these. It would be hard to ID ownership interests in land if they could be subject to mere declarations of intention – meaning there is uncertainty. Arguably it would also nullify the category of mutual agreement.

    • NSW, NT, TAS, QLD do have legislation allowing unilateral severance.

Proposed reforms: VLRC report 3.13-3.68 (recommendations not implemented but contain summaries of existing law)

Possible reform:

• severance by service of a written notice

  • adopted in England

  • however the simplicity/informality of the procedure could make it easy for people to take advantage of others

  • may also lead to increased litigation

  • create uncertainty of title to TSL

  • the disadvantages outweigh the advantages of this process; Commission does not support it

• severance by registration of an instrument of severance

  • can be a standard form

  • lodged at Land Registry

  • straightforward method of severance (unlike all the options now)

  • gives certainty on the registry and little argument about whether severance has been effected

  • the benefits of certainty outweigh the possible slowness of procedure

  • Commission supports this method being brought into effect through the TLA by insertion of a new provision (with the provision noting that it is in addition to those in effect currently)

• Recommendations for timing (when registration of instrument of severance should be seen to effect severance)

  • That an instrument of severance should only be effective to sever a joint tenancy if it is lodged with the Land Registry.

  • That severance of a joint tenancy should be effective upon lodgement of an instrument of severance. The joint tenancy will have been severed even if the joint tenant dies prior to its registration.

At present, the Land Registry usually requires the certificate of title to be produced before altering the nature of an interest in property. There are two reasons for this. Firstly, it allows the Land Registry to ensure that the correct person is dealing with the property, and not someone trying to defraud the true owner. Secondly, it enables the Land Registry to physically modify the certificate to reflect any changes made.

This may create issues as with JTs there is only one certificate of title and the other JT/s may have it and frustrate an attempt to sever. Banks may also not hand over certificates they hold mortgages to.

Where the certificate of title is held by one joint tenant, he or she can be ordered by a court to produce it.A bank which holds the certificate as a mortgagee may also be prepared to produce it, if the transaction which is to be registered does not affect the bank’s security interest. In addition, the Registrar has power to dispense with production of the certificate of title, or to order that it be produced.However, in each of these situations there could be great delays in obtaining the certificate. This could create difficulties if a joint tenant wishes to sever the joint tenancy quickly, due to ill health or old age, and may ultimately thwart his or her desire to sever the joint tenancy.

• Recommendation: That a joint tenant who lodges an instrument of severance not be required to provide the certificate of title prior to registration of the instrument. [This is as long as the person is identified satisfactorily)

Mortgagees

The conversion of a JT into a TIC will not affect the interests of mortgagees; they will still be able to enforce the mortgage against each borrower. In fact they may be better off if the mortgage is over...

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