New guidance on joint proprietorships

Monday, 21 January 2013
The Law Society and Land Registry have published a new practice note on the joint ownership of property.

The note is linked to the issue of a new Land Registry form called J0, following a series of judgements in the courts on shared ownership, typically where beneficial interest is disputed after cohabitees break up. Such situations have always caused uncertainty if the joint owners never made an express declaration of their interests, partly because Land Registry entries only record ownership of the legal estate, not the beneficial interest.

The two most prominent such cases are Stack v Dowden (2007 UKHL 17) and Jones v Kernott (2011 UKSC 53), which most practitioners regard as having increased rather than resolved the uncertainties. The latter found that cohabitants' beneficial interest in a property can change without their explicit intention, effectively overruling the existing statute law.

However, in the Stack v Dowden judgement, Baroness Hale made some comments that significantly changed the advice given to clients who are investing in a property jointly with others. They should declaring interests at the outset of a transaction, thus providing clarity about the parties' intentions and perhaps avoiding disputes in the future.

The new guidance thus emphasises the importance of recording the intentions of the owners beforehand, especially if they are buying in unequal shares. It makes it easier for joint purchasers to make a declaration of trust in the short time between exchange of contracts and completion. It is also useful where the seller has already executed the transfer and the practitioner needs to retain possession of it until completion.

The Jones v Kernott decision raised additional issues that Form JO does not address and are not covered in the new practice note.

Sources

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