Co-ownership and severance 

Two or more people can hold the same estate in land at the same time. Australian law recognises two forms of concurrent ownership, and the difference between them decides what happens when one owner dies, whether an owner can deal with their share, and what a court can order when the owners fall out.

Joint tenancy and tenancy in common

Joint tenants together own the whole. No joint tenant has a distinct share; each is entitled to the whole, subject to the equal rights of the others. The defining consequence is the right of survivorship: on the death of one joint tenant, that tenant's interest is extinguished and the survivors continue to hold the whole. Nothing passes under the deceased's will, because there was no separable share to pass.

Tenants in common hold distinct, undivided shares. The shares may be equal or unequal. Each share is a separate item of property that can be sold, mortgaged, or left by will. There is no survivorship — on death the share forms part of the deceased's estate.

The distinction is not about physical division. Neither form gives a co-owner the right to exclude the others from any part of the land: each is entitled to possession of the whole.

The four unities

A joint tenancy can exist only if four unities are present at its creation:

• Possession — each is entitled to possession of the whole. This unity is required for tenancy in common as well.
• Interest — the interests must be of the same nature, extent and duration.
• Title — the interests must arise from the same instrument or act.
• Time — the interests must vest at the same moment.

Absence of any of the last three means the co-ownership is a tenancy in common. Destruction of one of them afterwards severs the joint tenancy.

Which does the law presume?

At common law, joint tenancy was preferred, for the practical reason that survivorship reduced the number of owners over time and simplified title. Statute has reversed that in most Australian jurisdictions: a disposition to two or more persons takes effect as a tenancy in common unless a contrary intention appears. In New South Wales that reversal is effected by s 26 of the Conveyancing Act 1919.¹ Under Torrens title the register itself records which form applies, and an express statement of joint tenancy will be given effect.

Equity has always been readier to find a tenancy in common, and will treat co-owners as tenants in common in equity even where they are joint tenants at law — where they contributed unequal purchase money, where they are partners, or where they lent money jointly on mortgage.

Severance

Severance converts a joint tenancy into a tenancy in common, destroying survivorship for the future. It takes effect prospectively and cannot be achieved by will, because a will speaks only from death, by which time survivorship has already operated.

Severance occurs by:

• Alienation — a joint tenant transferring their interest to a third party destroys the unity of title. The transferee takes as tenant in common with the remaining owners, who stay joint tenants between themselves.
• Mutual agreement among all the joint tenants.
• A course of dealing sufficient to show that all treated the tenancy as held in common — for instance, negotiations proceeding on the basis of separate shares, even if incomplete.
• Unilateral declaration or statutory transfer to self, where the jurisdiction permits it. Under Torrens systems this is generally effected by registering a transfer, and the requirements are statutory.
• Operation of law, including bankruptcy and, in some jurisdictions, the unlawful killing of one joint tenant by another.

Whether a course of dealing severs is the most heavily litigated question. Mere unilateral intention, uncommunicated, is not enough; a firm offer to sell that is rejected is generally not enough either.

Rights and obligations between co-owners

Each co-owner may possess the whole, and one who occupies alone is generally not liable to pay occupation rent to the others — unless they have ousted the others, or unless they seek an accounting for improvements or expenditure, in which case occupation rent may be set off against the claim.

A co-owner who receives rent from a third party must account to the others for their share. A co-owner who pays more than their share of mortgage instalments, rates or necessary repairs may claim contribution, generally on final adjustment rather than as a running debt.

Terminating co-ownership

Co-ownership ends by agreement, by one owner acquiring the others' interests, or by court order. The statutory remedy allows a co-owner to apply for sale or partition. In practice the court appoints statutory trustees for sale, and the proceeds are divided according to the shares after adjustment for contributions.

Sale is now the usual order, partition being appropriate only where the land can sensibly be divided. The court's discretion to refuse is narrow — a co-owner is generally entitled to realise their investment — but it may take account of a contrary agreement between the owners or of hardship.

Applying this in a problem question

1. Determine the form of co-ownership at the outset, checking the instrument, the register, and any statutory presumption.
2. Test the four unities where joint tenancy is asserted.
3. Consider whether equity would treat the parties as tenants in common notwithstanding the legal position — unequal contributions and partnership are the standard triggers.
4. Work through severance chronologically, and be precise about the date each event took effect relative to any death.
5. Deal with occupation, rent and contribution as accounting questions, separate from title.
6. Address sale or partition last, identifying the statutory power and the likely adjustments.

Self-check

• Have I identified the form of co-ownership before discussing survivorship?
• Have I checked the statutory presumption for the jurisdiction rather than assuming joint tenancy?
• Have I put severance events in date order against any death?
• Have I remembered that a will cannot sever?
• Have I separated title questions from accounting between co-owners?