Co-Owner Issues

Partition

The Partition Acts allowed courts to grant an order of partition or sale instead of partition. Historically, courts could not refuse partition or sale. Courts take different views on whether they must order partition or sale or whether they have jurisdiction or discretion to refuse either. The courts in Northern Ireland take the view that the court should order either partition or sale. To order partition, it should be shown as a feasible alternative to sale.

If third-party consent is required for partition, the court may adjourn proceedings to see if consent will be forthcoming. Due to the principle that partition may not be ordered if it would prejudice a third party’s interest, the existence of the requirement for third-party consent may be a bar to partition where consent is not available.

The court may refuse to order partition where it would be futile. This will be the case if a third party can circumvent or defeat the order. This reflects the principle that equity does not act in vain. In Northern Ireland, partition will generally be ordered.

In the Republic of Ireland, the leading case of OD v. OD took the view that the courts have discretion to order partition, not sale. It took the view that partition may be refused even in cases outside the generally historically accepted limits, such as where it is futile or interferes with the rights of a third party. In effect, there is no right to partition where a sale is refused.

A party, a co-owner, may apply for partition notwithstanding that the property is mortgaged. However, it is a basic principle that partition will not be ordered to the prejudice of a third party, including a mortgagee. If the mortgagee does not consent, the property is sold subject to the mortgage. However, in practical terms, this will not be readily saleable, particularly if it is in negative equity.

The general principle is that if one owner wishes to redeem the mortgage, he must pay the entire amount and may, subject to exercising rights of contribution from others in due course.

Following partition, the mortgagor still remains jointly and severally liable for the mortgage payments. The mortgage attaches to the entire property. The debt is not partitioned or apportioned. Seeking an order of partition is likely to be an event of default entitling the mortgagor to enforce. In theory, a mortgage can be granted on an undivided share in the land. In practice, the mortgage may have limited value. A mortgage attaching to an undivided share may arise in respect of a judgment mortgage. A mortgage by one party affects severance so that the mortgagor becomes a tenant in common. If there are more than two owners, the other owners may remain joint tenants as between themselves. The non-mortgaging owners may retain their right to apply for sale or partition. If the mortgagee consents to partition, the divided share remains subject to the mortgage; if he does not consent, the mortgagor cannot compel partition without redeeming the mortgage.

Where one party has a mortgage, the other co-owners may seek partition. The mortgagee is a party to the action. They may seek partition or sale. Where an order of partition is granted, the mortgage attaches to the partitioned element, and the other owners take their share free from the mortgage.

Where a mortgagee of an undivided share seeks an application for possession and sale, technical difficulties arise. Courts have taken the view that a mortgagee is not entitled to possession against a co-owner who is not subject to the mortgage. In theory, the court could grant an order for possession in common with the co-owners, though this seems unlikely in practice. In theory, the undivided share could be sold under the mortgage.

A mortgagee of an undivided share will more likely seek a sale order. Under the Partition Acts, the mortgagee was obliged to first be entitled to possession to make an application. Has this been changed by the 2009 Act? An equitable mortgagee has rights under the Possession Act to seek an order for sale. However, under the Partition Act, he needed an entitlement to possession, and a number of authorities took the view that he was not entitled to possession, although other authorities took the view that an equitable mortgagee is entitled in equity to possession. This was formerly determinative of whether the requisite standing under the Partition Acts existed. Generally, a mortgagee will be entitled to an order for sale to secure his rights, even where the mortgage affects only part of the property.

Generally, the mortgagee cannot bring an action until there has been a default. The mortgagee is in no better position than the co-owner to make the application.

A chargee does not have the same rights as a mortgagee under the Partition Act. Where the charge is granted by all owners, the chargee is in much the same position as the mortgagee. He must apply for possession or sell based on his charge.

Where a property is charged, the co-owners may seek orders for partition or sale. Much the same considerations apply as in the case of a mortgage.

In strict legal terms, a charge by one owner only does not sever the joint tenancy, as there is no alienation. See the 2009 Act (1997 Act in Northern Ireland). The consequence of the charge not severing the joint tenancy is that on the death of one owner, it passes to the other. The Irish courts have held this position in respect of a judgment mortgage. Formerly, a chargee could not bring an action for partition.

A judgment mortgage operates as a mortgage of unregistered title land and is effectively a charge of registered title land. Co-owners of land subject to a judgment mortgage may themselves seek partition and sale.

Where a judgment mortgage attaches to one owner only. Registration of a judgment mortgage against unregistered land caused the severance of the co-ownership before the Conveyancing Act. However, in the case of registered title, it affects a statutory charge that does not affect the severance, before the 2009 Act.

A judgment mortgagee would have title in the case of unregistered land to seek a sale. In the case of registered title, it would appear that prior to the 2009 Act, they were obliged to seek an order under section 71 of the Registration of Title Act. Although such an order may not be available, it appeared that prior to the 2009 Act, the only option for a judgment mortgagee was to seek a sale of the undivided share.