Recent case law has clearly demonstrated the benefits of joint
owners of property declaring their beneficial interests.
Declaring interests provides clarity about the party's
intentions and helps avoid disputes in the future.
Following the complicated cases of Stack v Dowden [2007] and Jones
v Kernott [2011], the Law Society has recently issued a new
practice note on joint ownership and the Land Registry has produced
a new simple Form JO declaration.
Going back to basics, where a property is purchased in joint names
without a declaration of trust, there is a general presumption that
the parties hold the property as "joint tenants". This
means each owner is called a "joint tenant" and each owns
the whole of the asset, rather than a distinct fractional
share.
When a joint tenant dies, the asset in question does not pass to
his personal representatives as part of his estate. Instead, the
asset automatically passes to the surviving joint tenant. However,
Stack v Dowden and Jones v Kernott created considerable uncertainty
in this area. There were exceptional and unusual facts which
led the Court to find that the parties intended to hold the
property in unequal shares.
Following criticisms by the House of Lords and the Supreme Court in
the above cases, the Land Registry has released "Form
JO". Form JO enables joint purchasers to make simple
declarations of trust when time is short. The idea is to
encourage parties working at high speed or on a tight budget to
give some thought to their respective interests in property and
avoid future disputes of ownership.
Although Form JO will be better than nothing, our advice to clients
would be to make sure you enter into a detailed "declaration
of trust" setting out the parties' interests after taking
clear legal advice.
We would always champion the long-term benefits of doing a job
properly and ensuring declarations of trust are fully understood by
joint purchasers and co habitants.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
