Avoid property disputes in the event of death

A recent court case has highlighted the issues that can arise in a death where there is uncertainty as to the legal basis on which a property is held between co-owners.

This case follows a series of examples seen in my own practice where disputes arise due to a failure to execute certain documents or simply a lack of understanding of the ownership of a property, impacting on the intentions set out in a will.

Such issues can, in turn, lead to an unpleasant and costly legal battle.

Land ownership in this country is divided into two categories: legal ownership and beneficial ownership.

Legal ownership refers to the name or names under which the property is legally registered. Beneficial ownership essentially refers to the person or persons who benefit from the property.

An example might take the form of a family trust, where trustees are registered as the legal owners of property, but they hold that property for certain beneficiaries.

beneficial ownership

These concepts also become relevant when looking at co-ownership of property, where there are two ways to hold beneficial ownership of property.

These concepts are particularly important in the field of inheritance given the different application of the law to each type of beneficial owner.

Where beneficial ownership is said to be held on a “joint ownership” basis, it means that upon the death of a joint owner, their share automatically passes to the surviving joint owner.

The transmission of property rights in this way is often referred to as survival.

Most of the time, this means that with respect to the inheritance of property held in joint ownership, a person’s share of the property is generally considered to pass outside their estate – it is not affected by the contents of any wills that person may have left .

The alternative basis of effective co-ownership is that of “tenants in common”.

Ownership on this basis means that each co-owner has a separate share in the property, so that on the death of a co-owner their interest passes through their estate – it does not automatically pass to the surviving co-owner.

It is also important to note that the basis of beneficial ownership can change.

Generally speaking, such changes usually see co-owners seek to convert a condominium to co-ownership as joint tenants.

This process is known as “separation”. The most common way to break up a joint tenancy is for a joint owner to “serve” their joint owner with a notice stating their intention to hold the property as joint tenants in the future.

However, several cases, including a very recent case heard in Bristol High Court, have considered other means of dissolving joint tenancies – in particular by mutual agreement between joint owners or through a “course of business”. which suggests an intention for the property to be held on a common basis of tenants.

About Wanda G. Warren

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