10th July 2024 ❘ Legal News and Commentary

Agribusiness FAQs – What is joint ownership/beneficial interest?

Agribusiness FAQs – What is joint ownership/beneficial interest?

A property can legally be held by more than one person, either as Joint Tenants or Tenants in Common.

No decision needs to be final; even after a transfer has been completed and the land registered a joint tenancy can be changed to a tenancy in common, or vice versa.

Joint Tenants:

When two people co-own as joint tenants it is assumed that the ownership is equal irrespective of how payments etc have been apportioned for the property.

When one of the owners dies, the deceased’s share in the property passes automatically to the survivor without any other requirement. This is known as the right of survivorship, and the property forms no part of the deceased’s estate. The property passes to the other despite the provisions of any will that the deceased has made. Even if the deceased leaves all his or her land to a third party, the survivor will still own all of the property previously held with the deceased. The survivor is then free to deal with the property as they wish, or sell it and claim all of the sales proceeds.

Tenants in Common:

Co-owners who under a tenancy in common hold a distinct share of the property can leave that half share to any person they wish. Shares can be held equally or in different ratios. If, for example, one person has financially contributed more to the property, they may hold a larger share of the property than their co-owners.

In contrast to a joint tenancy, the deceased’s share under this method of ownership does form part of their estate on death, the share of the property passes according to the shareholder’s will (or to their next of kin if there is no will).

In other words, if the deceased leaves their share in the land to a third party then that third party will own that share of the property. Of course, the survivor(s) will still own their respective shares. If and when the property is sold the sale proceeds will then be divided between the third party and the survivor(s).

Beneficial interest:

Beneficial interest is another form of ownership that sits behind the legal ownership of the property and can be a very complex area of law. The beneficial ownership is separate from the legal ownership and the legal owner or owners will not necessarily be the same as the beneficial owner or owners. Beneficial interest is apportioned by creating a discretionary trust to sit behind the property.

The legal owner is said to hold the beneficial interest in the property on trust for the beneficial owner.

The beneficial owner of the land will have a right to the income from the property or a share in it, and a right to the proceeds of sale of the property or part of the proceeds.

It is not unusual for beneficial interest to crop up in farming transactions. Accountancy advice should be sought before instructing a solicitor to alter any beneficial ownership.

If you’d like further advice on Agribusiness matters you can contact our Agribusiness team here.