26 April, 2016
Joint tenancy is a form of co-ownership of property which has no specified shares and where each co-owner together owns the entire interest in the property. The right of survivorship is the cornerstone of joint tenancy as when one joint tenant dies, the surviving joint tenant takes the entire interest in the property.
A joint tenancy can be created by statute or by the conveyance of land to two or more people without specifying that they hold the property in separate shares. For registered land, s 53(1) of the Land Titles Act (Cap 157, 2004 Rev Ed) (“the LTA”) includes a presumption that co-tenants are joint tenants, unless it is specified otherwise. Under s 53(3) of the LTA, a joint tenancy can also be created by an instrument of declaration by co-owners of a property.
A joint tenancy, however, is not protected from being divided into specified shares and this article will discuss how this severance can be done.
A. ACT OPERATING ON HIS OWN SHARE
In Williams v Hensmann,
1 the recognised method of severance was by acting on one’s own share of the property. When a joint tenant deals with his share of the land, it evinces his intention to no longer be part of the joint tenancy. The various ways of doing this are explored below.
1. TRANSFER OF INTEREST
An owner may sever a joint tenancy by selling or gifting his share of the property to a third party or to a co-owner.
2. MORTGAGES OR CHARGES
Under the LTA, a mortgage over registered land no longer entails a transfer of title. It is merely a charge over the property. The question then is whether a mortgage results in the severance of a joint tenancy since the title is still with the owner of the property. While the position is not definitive, academics have argued that a charge, even if it does not amount to alienation, is an act operating on the joint tenant’s own share and as such, a mortgage of registered land must also effect a
severance.
3. WRIT OF SEIZURE AND SALE
The position on whether a writ of seizure and sale (“ WSS”) amounts to a severance of a joint tenancy has been in flux due to differing opinions from the Singapore Courts. In the past, it was well established that the interest of a joint tenant can be subject to a WSS. However, Malayan Banking Bhd v Focal Finance Ltd 3 (“Malayan Banking”) found that the interest of a joint tenant cannot be subject to a WSS as the interest is not distinct and identifiable like the interests in a tenancy in common.
Recently, the High Court in Chan Shwe Ching v Leong Lai Yee4 noted that the requirement for an interest in land to be distinct in order for a WSS to seize such interest had appeared for the first time in Malayan Banking, which did not refer to any supporting authorities.
After careful consideration, the High Court opined that before Malayan Banking, “severance of a joint tenancy into undivided shares was not a prerequisite for a WSS to be issued against a joint tenant’s interest inland”.5
Instead, the High Court accepted the views expressed by Professor Tan Sook Yee6 in academic writing that even though a joint tenant does not have an undivided share of the land, each joint tenant has the right to alienate and demarcate his undivided share and that should be an interest which is capable of being subject to a WSS.
The High Court next considered the issue of when severance of a joint tenancy can occur in the context of a WSS. It is clear that severance occurs at the point the sheriff sells the land. However, before the sale, a writ of execution over the joint tenant’s interest does not vest any interest in the land for the judgment creditor7 since the separate interest in the joint tenancy only vests upon severance. The High Court noted that certain anomalies could arise, for example, if the joint tenant whose share was subject to the WSS were to die before the sheriff sells it, as the entire property then vests in the surviving tenant. In other words, no severance has taken place as the sheriff has yet to sell the property. The High Court suggested that a solution would be to expand the definition of “act operating on his own share” to include the deliberate act of a third party as allowed by law. The registration of a WSS will come under this purview and result in a severance of the joint tenancy.
One argument often made against allowing a WSS to sever a joint tenancy is the unfairness to the co-owner of the property. However, the High Court observed that unfairness to the co-owner has to be weighed against the unfairness to a judgement creditor who is unable to enforce a WSS merely due to the manner of holding.8
A judgment debtor should not be permitted to prevent the enforcement of a judgment debt by refusing to sever a joint tenancy. In addition, the risk of unfairness is inherent in any form of co-ownership and joint tenants should be aware that their entitlement to the property is always subject to any acts of their co-owner.
4. INFORMAL UNILATERAL DECLARATION
With the introduction of s 53(5) of the LTA, a joint tenant may unilaterally sever a joint tenancy by an instrument of declaration. The question then is: in what proportion is the property severed into using this method?
In another recent High Court decision, Tien Choon Kuan v Tien Chwan Hoa,10 the Plaintiff and Defendant purchased a property as joint tenants with the Defendant contributing $6,400 and the Plaintiff paying the remainder of the purchase price. When the Defendant left Singapore due to financial difficulties, the Plaintiff severed the joint tenancy in equal shares via a unilateral declaration under s 53(5) of the LTA, but later sought a court order to rectify the land registry to reflect that the property was held in shares proportionate to their contributions to the purchase price.
In dismissing the Plaintiff’s application, the High Court emphasised that the intention behind s 53(5) of the LTA was to provide joint tenants who wished to avoid the rule of survivorship a simple way to unilaterally sever the joint tenancy.11
It is therefore important that the unilateral severance of a joint tenancy be in equal shares so that a co-owner cannot adversely vary the proprietary interests of another co-owner without the other co-owner being able to dispute the matter.
A severance under s 53(5) of the LTA is therefore automatically deemed to result in a tenancy in common in equal shares. However, the severance of a joint tenancy under s 53(5) of the LTA “does not preclude a court from declaring that the co-owners hold the property in shares proportionate to their initial contributions to the purchase price in equity”.12
5. ORDER OF COURT
A joint tenancy can also be severed with an order of court. This is useful where the joint tenant does not wish for a severance in equal shares and therefore cannot use s 53(5) of the LTA. However, there remains some uncertainty as to the extent to which legal action must have been taken for an effective severance. Is the mere initiation of court proceedings sufficient to effect a severance13 or is a court order necessary? One argument is that the mere initiation of proceedings should sever a joint tenancy in equity as it shows a joint tenant’s intention to act on his own share. 14
The position however is unclear, and while commentators have argued that s 53(5) of the LTA ameliorates this uncertainty 15 by providing an alternative and simpler method of severance, it should be noted that s 53(5) of the LTA cannot be used by joint tenants who wish for severance in unequal shares.
B. SUFFICIENT COURSE OF DEALING
Any course of dealing that suggests that the interests of all joint tenants were mutually treated as constituting a tenancy in common, may be considered a severance.16
However, as per Williams v Hensmann,17 when a severance depends on an inference of this kind without any express act of severance, it is insufficient to rely on an intention with respect to a particular share declared without the knowledge of the other interested persons. Rather, there must be a course of dealing by which the shares of all the parties involved have been affected.18
An agreement serves as an indication of the common intention to sever and as long as it unequivocally shows such common intention, that is sufficient. In fact, entering into a binding agreement may be sufficient even if parties have
not executed conveyance yet.19
Alternatively, if joint tenants entered into a mutual agreement as to the share of the property between themselves, then they hold the property as tenants in common in equity.
C. DECLARATION OF BANKRUPTCY
When a joint tenant is declared bankrupt, all his property automatically vests in the Official Assignee and this causes a severance of the joint tenancy. The existing joint tenant becomes a tenant in common with the Official Assignee.20
D. CONCLUSION
While the concept of joint tenancy has long been recognised as having no specific shares, the fact is that each owner has a share that is capable of being identified and alienated. This is often misunderstood by the owners of property who assume that entering into a joint tenancy guarantees either the whole share of the property or none.
The duty falls on the lawyers to inform their clients that their joint tenancy is not impenetrable and that it does not provide any immunity from a joint tenant’s actions or circumstances. After all, it is evident that a joint tenancy may, as shown above, be just a tenancy in common in-waiting.
1 (1861) 1 John & H 546, 70 ER 862.
2 Tan Sook Yee’s Principles of Singapore Land Law (3rd ed., LexisNexis, 2009) at [9.41].
3 [1998] 3 SLR(R) 1008.
4 [2015] SGHC 210.
5 Ibid. at [12].
6 Tan Sook Yee, “Execution Against Co-owned Property” [2000] SJLS 52.
7 Supra , note 4 at [18].
8 Supra , note 4 at [23].
9 Supra , note 4 at [22].
10 [2016] SGHC 16.
11 Ibid. , at [8].
12 Ibid., at [12].
13 Supra , note 2 at [9.49].
14 Supra, note 3 at [9.49].
15 Supra , note 3 at [9.50].
16 Supra , note 1.
17 Supra , note 1.
18 Supra , note 1.
19 Supra , note 2 at [9.52].
20 Supra note 2 at [9.59]
For more information, please contact:
Sandra Han, Partner, RHT Taylor Wessing
sandra.han@rhtlawtaylorwessing.com
