- Section A
Joint tenancy is a method of co-ownership that gives the holder a potential right to the property. Joint tenancy does not vest in the holder until all the other joint tenants have died. This implies that this method of co-ownership does not form part of the estate of a deceased holder because of the right of survivorship. For a joint tenancy to exist, these conditions must apply:
- The “four unities” unities must be present. These are unity of possession, unity of interest, unity of title and unity of time. the unity of possession that ensure that the possession is to every part of the flat, the unity of interest ensures that interests of both of them are of the same nature, extent and duration, the unity of titles to ascertain that the titles are from the same source, and, the unity of time will see to it that both Clifford and Mary acquire their interest at the same time.
- There must be words of severance such as “equally”, “individually” or “in equal shares”. Such words only apply in tenancy in common.
- There must be no presumptions of equity such as unequal contribution to the purchase price (Lake v Gibson (1979) 1Eq Rep290) or money advanced on mortgage by the tenants
Clifford wishes to have a joint Tenancy on the flat with her daughter Mary. Joint tenancy is a co-ownership method in which the right of survivorship applies. This simply means that when either Clifford or Mary dies, the ownership of whoever is deceased shall be passed to the surviving joint tenant, as it is stipulated in the Law of Property Act 1925, Section 34. If Clifford dies first, the right of survivorship shall be passed to her daughter Mary and vise versa. However, the rights of survivorship only prevail over testamentary disposition. This means that Mary cannot take the advantage of the rights of survivorship if she kills her father; neither does Clifford if he kills Mary. In Re K [1986] Ch 180, a couple owned a house in a joint tenancy. The wife then killed the husband by mistake when she threatened him by a shotgun. The court held that the cause of the killing was to sever the joint tenancy and so the wife was not warranted the right to survivorship.
2. Section B
Mary finally wishes to move out of the flat and go to a man she is in love with. As to this decision, Clifford has to sever the flat in equity. Under section 2 of the CPO, a joint tenancy of an estate or interest in land may be severed in equity by a notice served by a joint tenant on the other joint tenants or by any other method that is effective in equity or that would, but for subsection (1) of the CPO be effective at law.
Therefore, a joint tenancy may be severed in equity by a notice to other joint tenants, sale or alienation, an agreement to sever, a mutual course of dealing, and, unlawful killing.
This severance that Clifford wants to undertake has pros and cons. The advantage is that by severance, Clifford shall have avoided the consequences of right of survivorship since he is currently running a risk of dying before Mary. This means that if the severance is completed successfully, the property will still be part of his estate for distribution according to will or under the intestacy rules. The disadvantage is that this will also terminate his own right of survivorship so that if Mary dies before him, he will not be able to claim Mary’s share. Since it is Mary who wants to move out and Clifford is willing to let her go, this severance is most likely to go through.
The best method that Clifford can do the severance is by notice. Severance by notice is the same as severance by law. This method therefore applies section 8(1) of the CPO which states that “a joint tenancy of an estate or interest in land may severed at law only by:
- a notice served by a joint tenant on the other joint tenant, or
- an instrument”
The following conditions must apply in this method of severance:
- The notice must go to all the joint tenants
- The notice should show an immediate intention to sever (Harris v Goddard [1083] 3All ER242 )
- Once a notice has been served, it can never be revoked (Kinch v Bullard [1999] 1 WLR 423 )
This method is better than the rest is it has all the legal requirements and the notice issued by court serves as a proof for future reference.
3. Section C
When the three, Clifford, Mary and the vendor decided to visit an estate agent, the agreement they signed was a preliminary agreement, also known as the Provisional Agreement for Sale and Purchases. Under this agreement, Clifford would be required to pay some down payment to the vendor. Clifford must therefore make sure that the Provisional Agreement for Sale and Purchases has a clear contract price before he signs.
A distinctive Provisional Agreement for Sale and Purchases that is drafted by the estate agent is a three-party that bonds the vendor, the purchaser and the estate agent. This provisional agreement bears vital information such as the description of the property, the price (including the initial deposit and the pending balance) and the payment method. In this agreement, there is also a reference to the solicitors that represent the parties.
The Provisional Agreement for Sale and Purchases has clauses that take care of repudiation of the parties. If a vendor repudiates, he will have to return the deposit without interest to the purchaser. He must also pay a compensation amount equal to the deposit amount. If it the purchaser who repudiates, then the vendor shall be entitled to forfeit the deposit initially paid by the purchaser.
In this agreement, there may be other further express provisions that none of the parties shall seek other relief such enforcing the contract for specific performance. Without such express provision, repudiations may bear more serious penalties including paying the damages to the other party.
There is also a clause which stipulates that the party which fails to complete the agreement shall pay a fee to the estate agent. If both the parties fail to complete the agreement, then they both share this fee.
There may also be a clause indicating which party the estate agent represents; whether it is the vendor, the purchaser or even both of them. Time clause may also be included in this provisional agreement. The time clause states that “time is of the essence”
Apart from the express terms, there may be also some terms implied by the court on this Provisional Agreement for Sale and Purchase. I the case of Twinkle Step Investment Ltd v Smart International Industrial Ltd [1999] 4HKC 441, Litton accepted a term that gives the purchaser the right to examine the property before completion was entailed in an otherwise open contract. When a provisional agreement is based as the open contract for the parties, the court shall imply more terms on the contract.
Under the provisional agreement, the purchaser has the right to raise requisitions on the title within a reasonable time. This means that Clifford’s solicitor has to examine all the title documents and raise authoritative request on any defects found within a specified time. Section 7 of the CPO puts this time as “no later than 14 days prior to completion”. Other effects encrypted on the Provisional Agreement for Sale and Purchases are that:-
- The land conveyed matches the description in the contract and is assumed to be free from any hindrance
- The vendor shall show and provide a valid title
- The contract shall be followed by an assignment conveying the property to the purchaser
- The vendor shall deliver a vacant possession to the purchaser
- The vendor will take a reasonable care of the property until the completion of the contract
4. Section D
After the provisional agreement at the estate agent office, Clifford will now have to sign an Agreement for Sale and Purchases (ASP). This is a formal agreement and the parties are represented by their solicitors at this stage. The vendor’s solicitor prepares this formal agreement based on the provisional agreement. The purchaser’s solicitor then approves of it. The ASP may have many clauses depending on the clauses in the provisional agreement. It is important to note that this agreement marks the completion of the purchase. If the date of completion was not indicated, the common law assumes that it will take place within a reasonable time. In a reference case of Kwan Siu Man Joshua v. Yaacov Ozer [1999] 1 HKC 150, the court of final Appeal held that completion was an essential term and therefore should not be implied into the contract. Some of the clauses in the ASP are:
- Parties to the contract
These are the parties involved in the sale and purchase of a property. In most occasions, it is has always been the vendor and the purchaser. However, confirmers or witnesses may be included as parties. These parties are usually listed in a schedule to the formal agreement.
- The property
The property is the subject matter of the formal agreement. The property is fully described, both physically and legally, and put in the schedule. The physical descriptions include the address, plot number and the lot number. The legal descriptions include the tenure, the benefits attached, the burdens attached and the interests. If the title sold by the vendor has any defect which has already been identified, it shall be clearly specified here. The defects that the vendor has to reveal must include all the latent defects that are exclusively known to the vendor and all the defects that cannot be easily discovered on the inspection of the property. The interests to be sold are all regarded as vendor’s interests that are all legal and equitable and the title to be passed is classified as good and marketable.
- The price
The price clause includes the deposit and the completion price. The deposit price must be the same as that quoted in the provisional agreement. Form 2 of the third schedule to the CPO, which is normally incorporated into the formal agreement, also bears the deposit price and the balance to be paid by the purchaser.
- Time
Time is of great essence even in the ASP. This covers the time as from the beginning of the contract to the completion of the purchase. After the payment of the initial deposit during the provisional agreement, the purchaser had up to 14 days to complete the balance as stipulated in section 7 part A of the CPO.
