LAW OF PROPERTY (JOINT TENANTS) (Hansard, 11 February 1964)

§ Sir Barnett Janner (Leicester, North-West)

I beg to move, That leave be given to bring in a Bill to amend the law with respect to land vested in joint tenants. Technically, my proposed Bill is difficult to explain, but it is not very difficult to understand. The House frequently asks whether the Law Society is diligent in trying to reduce the cost of legal matters. I think that my Bill would serve as an example of the kind of diligence that it shown and will, to a considerable extent, make hon. Members realise how difficult it is for lay people engaged in the law to deal with legal matters when they are not aware of the law.

The Bill would not seek to introduce any new principles of law. It would simply clarify an ambiguous situation created by the property legislation of 1925. The purpose of that legislation was to simplify the legal formalities involved in the purchase and sale of land, and in this it was generally successful. Indeed, it succeeded in reducing to a considerable extent the cost of conveying land from one person to another.

However, in the case of a sale by a surviving joint tenant, difficulties were actually created, and it is the purpose of the Bill to remove these difficulties and to state in clear terms what is believed to be the law on this subject, so avoiding unnecessary expenditure on the part of people who are purchasing land, and difficulties arising for people who do not understand the law owing to the complications which have arisen in it.

Let me give a single illustration of the difficulties under the old law. If a husband and wife purchase a house they usually become entitled to it, in law, as joint tenants. Shortly, this means that on the death of one spouse the whole house belongs absolutely to the survivor. Before 1925, when the property was sold the survivor simply conveyed it to the next purchaser. However, in 1925, the Law of Property Act—which was intended to simplify the procedure, 222 and which did simplify it—provided that joint to rants became trustees.

It therefore followed that the usual rules governing sales by trustees applied to sales by joint tenants. One of these rules provides that a purchaser will get a valid receipt for his purchase money only if he pays it to at least two trustees. The result is that where a surviving tenant wishes to sell property he or she has to appoint an additional trustee so that the purchaser can get a valid receipt for his purchase money.

This has created a complication which involves additional expense. It was soon realised that this result had not been intended. In 1926, the Law of Property (Amendment) Act was passed, which attempted to deal with the problem. This House sometimes does not foresee the difficulties that it creates in its legislation, or realise that it might have avoided difficulties if it had added certain provisions. That Act provided that a surviving joint tenant who was solely and beneficially entitled could deal with property as if he were not a trustee. But this did not remove all the difficulties.

I will return to the illustration that I have given. If one of the spouses mortgages his or her half-share of the property the joint tenancy is divided. This division is called a severance. The result of a severance is that the property does not puss to the survivor on the death of one spouse, so that the survivor is no longer solely and beneficially entitled. Thus, reliance cannot be placed on the Law of Property (Amendment) Act, and the old procedure of appointing a new trustee has to be employed. This is still the only course to be followed when it is known that a severance has taken place, and the Bill does not seek to alter the law in this respect.

However, the question whether or not severance has taken place is now always raised by a purchaser, and it is an extremely difficult matter to prove. For instance, it is quite possible for one spouse to mortgage his or her half-share in the property without telling the other. On the death of that spouse the other could think himself solely and beneficially entitled, when, in fact, this would not be the case. Thus, very few purchasers now take advantage of the provision of the Law of Property 223 (Amendment) Act, and they usually require the vendor to appoint an additional trustee to receive the purchase money. This is the course recommended by the Law Society, which has received a substantial volume of correspondence from members of the profession seeking advice on this difficult question.

Thus, an additional responsibility is placed on the vendor, who in many cases is unwilling to incur the trouble and expense involved in appointing an additional trustee. Also, it is frequently difficult to find a trustee who is willing to act, because he then becomes responsible for the correct application of the purchase moneys. Thus, conveyancing, far from being simplified, has been rendered very complicated in this connection.

In 1925, it was probably intended that a surviving joint tenant should be entitled to convey the whole property unless it was actually known that severance had occurred, and this is the sole object of the Bill. I gather that the terms of the Bill have been considered by the Government and that there is no objection to it, except that it will require some amendment in Committee.