Co-owners hold a land under a trust. The following article explains about the process of investigation when the buyer buys land owned under a trust. It includes about procedures in registered as well as unregistered land.
Title investigation of registered land sold by co-owners
Registered tenants in common title
When co-owners hold a property as tenants in common in equity, a restriction is placed on the proprietorship register. When one or more of the co-owners die (and there is only one surviving co-owner) , the restriction calls for the appointment of a second trustee to join with the survivor in the transfer. This is the safest method to deal with such a situation. The buyer is allowed to deal with the sole survivor, provided that the restriction is removed from the register. The proof of the deceased must be provided.
The following is the wording of the restriction that is in use from 13th October 2003 onwards:
“No disposition by a sole proprietor of a registered estate (except a trust corporation) under which capital money arises is to be registered unless authorised by an order of the court.”
Sometimes, the old version of this restriction may be used with regards to registrations made before 13th October 2003:
“No disposition by a sole proprietor of the land (not being a trust corporation) under which capital money arises is to be registered except when under an order of the registrar or the court.”
Title investigation of registered land owned by joint tenants
When co-owners are joint tenants in equity, restrictions are not placed on the Register and the buyer is safe to deal with the surviving co-owner, provided he/she proves the death of the deceased co-owner. Although it is possible that the equitable joint tenancy may have been severed, a problem shall not occur unless a restriction is placed on the registry. But a problem may occur when the beneficiary of the deceased co-owner has an overriding interest (under LRA 1925) and is in occupation of the property.
The issue would ideally be highlighted on an investigation conducted by the buyer’s conveyancing solicitor. It would reveal information on the occupiers, thereby allowing the buyers to reveal information.
Title investigation of unregistered land sold by co-owners
An inspection of the conveyance under which the co-owners initially purchased the land would reveal whether the property is held as joint tenants or tenants in common.
Unegistered tenants in common title
When a property is held as tenants in common, the sole surviving co-owner does not automatically become entitled to the legal and equitable interest in the land. It is possible that the estate may pass through a will or intestacy, so that the trust still subsists. Here a buyer can insist on taking conveyance from two trustees to overreach any beneficial interest which may exist under the trust. This is perhaps the safest and the most common method of dealing when the property held as tenants in common.
But if the surviving co-owner is the sole beneficiary of the legal and equitable interest in the property, he may convey as the sole owner with the buyer after producing suitable proof to the buyer. A certified copy of the grant of probate or an assent made in favour of the surviving co-owner is sufficient proof. A copy of the deceased’s death certificate can also be produced. However, if the grant exists, the death certificate is unnecessary.
Unegistered land title owned by joint tenants
Although the beneficial joint tenant becomes the owner of the legal and equitable interest in the property, a buyer will accept conveyance from the survivor only when he is satisfied that he can avail protection under the Law of Property (Joint Tenants) Act 1964. The problem with joint tenancy is that it may have been severed at any time, turning it into a tenancy in common.
The Law of Property (Joint Tenants) Act 1964 allows the buyer to assume that no such severance has taken place before the death of the deceased joint tenants. To ensure that the buyer is protected under the Act, the following three conditions should be fulfilled:
a) There should no written record of severance on the conveyance under which the joint tenants bought the property.
b) The Land Charges Registry should not have a record of bankruptcy proceedings registered under the name of either of the tenants, and
c) The conveyance made by the sole survivor should include a statement that the survivor is the sole beneficiary entitled to the land.
When even one of the above mentioned conditions are not met, the surviving co-owner should be treated as a surviving tenant in common and the procedure relating to tenants in common should be followed.
Photo courtesy: jimbowen0306
