Consultant at Lincoln-based Knights Plc. writes about settling ownership issues now to reduce conflicts later

How do you own land or property jointly? This is one of the more difficult explanations which lawyers are daily required to give to clients, writes Andrew Fearn, consultant at Lincoln-based Knights Plc.

Quite understandably, lay people usually do not understand the contrast between the terms ‘beneficial joint tenants’ and ‘tenants in common’.

The difference is often complicated by a failure to be explicit in documentation and to recognise the different nuances between domestic and business arrangements.

When two people are described as holding land as beneficial joint tenants, they effectively hold undivided shares in the property and the whole passes to the survivor on the death of the first to die.

The opposite applies when people hold property as tenants in common. In this case, the shares in which the asset is held are specified (for example…‘in equal shares’) and each joint holder can pass their share under their will.

Normally, this works in a clear and straightforward way and no problems arise.

As you might expect, the exceptions are those which inevitably cause the difficulties and a case involving the Williams family found itself in the Court of Appeal.

A son and his parents had bought a farm in their joint names but, unusually, there was no express declaration as to how the farm was to be held.

The Court of Appeal looked at some previously decided cases which involved cohabiting couples and where the court found a presumption that there was a beneficial joint ownership.

However, the Court made it clear that this presumption would not normally be made in an arrangement which was, essentially, commercial.

It was true that the farmhouse was the home for the whole family but, at the same time, this was the base for the farming business and they were, as a matter of fact, partners in the business.

Their partnership deed required them to account to each other and buying the farm had been, essentially, a commercial decision for the benefit of the business.

What is the moral of this case?

If you are a joint owner, check on what basis you and your joint owners hold the property.

If necessary, seek some advice.

If it is at all unclear, it can be remedied but this is best achieved while all joint owners are alive and in agreement.

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