#7150 - Co Ownership Policy - Property B

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.

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.

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 an undivided JT’s interest as if it converts to a TIC and the borrower dies the mortgage does not extinguish (as in cases of JTs) and the mortgage can be enforced.

JTs can already be severed without the mortgagee’s assent (eg declaration of trust).

However this can be affirmed by legislation. Recommendations:

• That the enforceability of a mortgage or security interest against a coowner should not be affected by registration of an instrument of severance.

• That severance of a joint tenancy by registration of an instrument of severance, without the consent of any mortgagees or holders of security interests, should not be considered a breach of any term in a contract that requires the mortgagee, or holder of the security interest, to consent to any dealings with the land.

Notification before severance

Should not be necessary, in order to avoid situations of violence/fear of reprisals etc.

Recommendations

• That a provision be inserted into the Transfer of Land Act 1958 requiring the Land Registry to notify all joint tenants of any dealing that severs the joint tenancy.

• That such notification be sent upon registration of the dealing that severs the joint tenancy.

• That co-owners who seek to sever a joint tenancy be required to provide the Land Registry with the names and last-known addresses of all joint tenants, where these are known. A failure to provide last known names and addresses should not hinder the severance process.

• That notification be sent to all joint tenants (including the person who proposes to sever the joint tenancy) at their last-known address, as well as to the co-owned property (if practicable).

• That the fee charged by the Land Registry for lodgement of the relevant transaction should permit cost recovery for notification.

Divorce

Recommendation: That a provision be inserted into the Property Law Act 1958 specifying that, in the absence of written evidence of a contrary intention, parties who divorce after the creation of a joint tenancy be deemed to have severed the joint tenancy.

Personal property

Recommendations:

• That a provision be inserted into the Property Law Act 1958 allowing joint tenancies of goods to be severed by service of a written notice.

• That the notice be in a prescribed form.

• That the notice be served upon all other joint tenants at their last known addresses. Service should either be personal or by registered mail.

• That in the event of a dispute as to whether severance has taken place, proof should be provided that attempts were made to serve the notice on all other joint tenants.

• [VLRC Report 4.51-4.72] VCAT should have a broad but fettered discretion to order property to be sold or divided, in that they should be required to take certain factors into account. Sale of property should be the primary remedy ordered; division should be available when justice demands it.

• An order of trustees’ appointment will be required where the co-tenants are minors and recommended where...