Joint or Common Property? [45]
Mr Gordon challenges the assumption apparent in recently published texts that taking title in joint names means the same thing as joint property.
Within a period of a few months, two new books have been published on the subject of property law, namely Property Law by Robson and Miller (W Green) and Scottish Property Law by McAllister and Guthrie (Butterworth). Both are excellent books in their own right; the former deals with heritable and moveable property while the latter covers heritable property exclusively.
Both books, in different ways, make an interesting assertion about the distinction between joint and common heritable property, namely that when such property is taken in “joint names with a survivorship clause” (Robson and Miller, p 5) this is an example of joint property rather than common property. McAllister and Guthrie (p 64) appear to suggest something similar although the third paragraph on that page is confusing; one suspects that words have dropped out of the text. As it stands, it could be read to mean that simply taking heritable property in pro indiviso shares implies a special destination, which is not the case in Scots law and cannot be what the writers intended.
There is no argument but that property taken in the name of “AB and CD” is an example of common property. Like joint property, common property is owned pro indiviso; unlike joint property, there is no automatic accretion and, on the death of AB, his share does not pass automatically to CD. It would have to be confirmed to by AB’s executor and disposed of according to intestate or testate succession, depending on the circumstances. Any common owner may make a request to the other owners for a physical division of the property; if agreement cannot be reached, he can proceed to an action of division. Such division would not, of course, apply to common property within a tenement house which is really an ancillary right to the absolute ownership of a particular flat.
A common owner may also burden his share by a standard security or dispose of it inter vivos or mortis causa. In Steele v Caldwell, 1979 SLT 228, a husband, having put his wife out of the house, sold his share to third parties who duly took occupation. Whilst the matrimonial homes legislation would nowadays give the wife important occupancy rights, she would still not be able to prevent him from exercising his common law rights over his own property, such as selling it.
A joint owner, on the other hand, is in an entirely different position. He may not alienate his interest, leave it by will nor grant individual security over it; in particular, on an individual owner’s death (or resignation) his interest passes by automatic accretion to the surviving joint owners. No joint owner has any valid claim for division of the property. The most usual types of joint property ownership are by trustees, partners and office bearers of unincorporated bodies.
The learned authors referred to above seem to be suggesting that if common property held by AB and CD is taken subject to a special destination (“AB and CD and the survivor”), it becomes joint property. Presumably, the rationale behind this remarkable sleight of hand is the fact that on the death of AB, his share automatically passes to CD and also that CD is statutorily infeft at that moment in the entire subjects, even though the record shows otherwise (Conveyancing (Scotland) Act, s 10 (3)).
It is surely open to question whether accretion, as in the case of joint property, is actually the same as acquiring rights by virtue of a special destination. Not all special destinations operate automatically;[46] if they are more complex, i.e. not merely survivorship, the executor will require to confirm thereto for the limited purposes of granting a title. However, even if accretion and acquiring rights under a special destination are the same, the fact that common property rights have been modified by agreement does not ipso facto convert them into joint property rights.
If the title is in name of AB and CD and the survivor, AB can still dispose of his own share inter vivos, thus evacuating the special destination quoad his own share, or he can request a division or grant security over it (subject always to the matrimonial homes legislation) which he could not do if he were a joint owner. The only restriction on his common property rights is his general inability to deal with his share by will, as, generally speaking, he will not be able to evacuate the special destination mortis causa.
Part of the confusion in this area may arise from the use of the expression “taking the title in joint names” while actually referring to common property.
The present writer’s conclusion is that where property is taken in name of AB and CD and survivor, it is more appropriate to refer to it as common property that is subject to a special destination than to metamorphose it into joint property.
Those who disagree with that conclusion may be tempted to point to the case of Munro v Munro, 1972 (Sh Ct) 6, in which, by agreement between the parties, a father conveyed heritable property in favour of himself in liferent and to his three children equally between them and to the survivors and the last survivor of them and the heirs of the last survivor in fee. The effect of the agreement was the creation of a kind of trust to provide an opportunity to each of the children to return to and live in the family home.
The sheriff concluded that the effect of this unusual agreement was to deny the children any common property in the fee of the subjects. As they could, as individuals, neither dispose of it inter vivos nor mortis causa, the sheriff concluded that it was joint property. This case, however, would seem to be a “one off” and has been criticised. It does not seem to undermine the basic proposition of this short article that property taken in the name of two (or more) individuals and survivor is common property subject to a special destination and not joint property.