Joint or Co-Ownership for a syndicate. What's the difference??

[Airscrew]

Hi All.
Hopefully somewhere out there is a sharp legal mind with regard to ownership and survivorship.

The RYA has a 2 page sheet which tries to explain the difference between joint and co-ownership. But for me, its not clear enough.

https://www.yachtingdirections.com.au/uploads/1/0/3/4/103462196/joint_ownership_or_co-ownership.pdf

The key paragraph is:

An important consequence of joint ownership is the right of survivorship. This means that if one of the joint owners dies, his legal title in the boat passes automatically to the surviving joint owner(s). This may be desirable in the case of a husband and wife team but is unlikely to be what a group of friends owning a boat together would want.

The 'surviving joint owners(s)', as above, isnt 100% clear as to wether that means in the syndicate, or not.
Perhaps it needs a 'for the avoidance of doubt' phrase?

We have a syndicate, and an agreement, but we want to add a clause regarding survivorship.
The outcome we want, is that if a syndicate member dies, that the share can be managed and sold by the remaining syndicate members, with the proceeds paid to the surviving partner (lets say wife).
We want to avoid the share passing directly into probate, or passing directly to a surviving partner who is not a syndicate member, and who may not sail, nor have an interest in maintaining or selling the boat.

To achieve this, should our agreement be 'joint' or 'co' ownership??
And in either case, are there legal issues we should be aware of.??

Thanks in advance. Jonathan.

 

[petem]

In our three man syndicate, all shares are owned jointly between husbands and wives. If a husband dies then the wife becomes the sole owner of that 21/64 share. She alone can then follow the provisons covered elsewhere in the agreement to sell her share.

I can't see any reason why a wife would continue her ownership but if it became an issue for the other remaining owners then there are provisions in the agreement to force the sale of the whole boat.

 

[Tranona]

The distinction is quite clear. With joint ownership the share on death goes to the other joint owners. So if there are 3 in the syndicate and one dies the surviving two inherit the 1/3 share. With co ownership each member owns a share reflecting their contribution. The syndicate member however could also own their share jointly with their partner/wife/husband, or indeed any other person. On death the share passes to the joint owner who may wish to keep it or sell it. It is not necessarily the decision of the remaining members whether it is sold or not. The agreement could for example give the option for the remaining members to purchase the deceased share.

Selling shares in syndicates is not easy - few buyers, difficulty of establishing a fair price and finding a buyer acceptable to the remaining members. Often easier to have a mechanism for establishing the value of the share to be paid to the deceased estate by the remaining members who then have the choice of selling the share or keeping it. Alternatively the boat could be sold and the proceeds distributed to members including the deceased estate.

No right or wrong - it is up to members to decide the mechanism, although it makes sense for the agreement to show clearly that it is co ownership .

 

[ylop]

We have a syndicate, and an agreement, but we want to add a clause regarding survivorship.
The outcome we want, is that if a syndicate member dies, that the share can be managed and sold by the remaining syndicate members, with the proceeds paid to the surviving partner (lets say wife).
We want to avoid the share passing directly into probate, or passing directly to a surviving partner who is not a syndicate member, and who may not sail, nor have an interest in maintaining or selling the boat.

I don’t think you can do that. Either it passes “outside of probate” because they are joint owners of the same share, and there is no financial transaction involved OR the share becomes property of the estate. You can probably set syndicate rules which mean the estate can’t sell/transfer the share without consent of other parties or must first offer the share to existing syndicate members etc.

An alternative, but more complex and expensive option would be to set up a Ltd Co, have the company own the boat and have the syndicate members be shareholders in the company. The original owners can thus become directors and if one dies continue to control the decisions without worrying about the shares (except for decisions that require shareholders rather than directors). That involves a bit of accounting and admin work that most situations wouldn’t justify - but if you were creating a syndicate bank account with significant funds might be worth considering. However doing that “right” probably needs non standard articles of association and a shareholder agreement - which means professional legal advice.

 

[petem]

We want to avoid the share passing directly into probate, or passing directly to a surviving partner who is not a syndicate member, and who may not sail, nor have an interest in maintaining or selling the boat.

Reading this again, surely it's a good thing that the wife inherits the share (via joint ownership) otherwise it will be subject to probate and that could be problematic. As I said above, all three shares in our boat are owned jointly by husband and wives and the wives are parties to the syndicate agreement.

You should already have clauses in your agreement that:

1) allows a partner to sell their share
2) gives first refusal to the remaining syndicate members
3) requires all members to pay for the upkeep of the boat
4) allows a majority of the owners to force a sale of the whole boat

If the wife inherits a share and doesn't use the boat then providing she pays for the running costs then what do you care (unless you have a syndicate where members do a lot of the maintenance themselves)?

 

[ridgy]

Seems a pretty unlikely situation where a wife inherits and wouldn't want to be rid asap and have others take care of that process.

 

[benjenbav]

Hi All.
Hopefully somewhere out there is a sharp legal mind with regard to ownership and survivorship.

The RYA has a 2 page sheet which tries to explain the difference between joint and co-ownership. But for me, its not clear enough.

https://www.yachtingdirections.com.au/uploads/1/0/3/4/103462196/joint_ownership_or_co-ownership.pdf

The key paragraph is:

An important consequence of joint ownership is the right of survivorship. This means that if one of the joint owners dies, his legal title in the boat passes automatically to the surviving joint owner(s). This may be desirable in the case of a husband and wife team but is unlikely to be what a group of friends owning a boat together would want.

The 'surviving joint owners(s)', as above, isnt 100% clear as to wether that means in the syndicate, or not.
Perhaps it needs a 'for the avoidance of doubt' phrase?

We have a syndicate, and an agreement, but we want to add a clause regarding survivorship.
The outcome we want, is that if a syndicate member dies, that the share can be managed and sold by the remaining syndicate members, with the proceeds paid to the surviving partner (lets say wife).
We want to avoid the share passing directly into probate, or passing directly to a surviving partner who is not a syndicate member, and who may not sail, nor have an interest in maintaining or selling the boat.

To achieve this, should our agreement be 'joint' or 'co' ownership??
And in either case, are there legal issues we should be aware of.??

Thanks in advance. Jonathan.

I just came across this. Having spent more time than I care to recall explaining the right of survivorship … here goes:

If two people jointly own an asset then when the first one dies, the other one automatically owns the whole thing irrespective of any will or anything else. The asset doesn’t go into probate because, at the point of death, there’s nothing to go into probate.

So, if three friends own a boat together they probably don’t want to play this game of Russian roulette. They might, of course. Such an arrangement is sometimes called a tontine.

More commonly, they’d be co-owners: each owning a third share (or the shares might not be equal). When the first one dies their share would pass through probate, either as directed by a will or on intestacy.

In any event, as @petem and @Tranona say, the syndicate would need some rules for future management and sale of the boat and to control the ownership group to known or approved (by the others) persons.

If one or more of the one third shares is itself owned by a couple (in a marriage/civil partnership relationship) another issue arises, as to how they should hold their share between themselves. It’s likely to be beneficial to the syndicate if the third share can’t get fragmented so that you find you’ve got a 1/6 shareholder that turns out to be the local donkey sanctuary.

In a nutshell, the difference between joint and co-ownership is that on death joint ownership automatically moves the whole interest in the asset to the surviving joint owner.

The follow-on points as to whether in your circumstances you want that to happen need to be carefully thought through.

 

[thinwater]

In no case are both spouses sailors? Or perhaps there is a child that is a sailor and the surviving spouse would like for them to have continuing access. In my case, both of these could be true, in which case nothing in the partnerships has materially changed.

Seems odd.

 

[ashtead]

Jus accrencendi is the term used and Wikipedia has more info clearly neither route is better but as said the advantage in property is the interest passes automatically without need for grant. That said if spouse of deceased is sole beneficiary where held as tenants in common you can complete some HMLR forms to effect the transfer to survivor without probate simply put.

 

[Refueler]

An alternative, but more complex and expensive option would be to set up a Ltd Co, have the company own the boat and have the syndicate members be shareholders in the company. The original owners can thus become directors and if one dies continue to control the decisions without worrying about the shares (except for decisions that require shareholders rather than directors). That involves a bit of accounting and admin work that most situations wouldn’t justify - but if you were creating a syndicate bank account with significant funds might be worth considering. However doing that “right” probably needs non standard articles of association and a shareholder agreement - which means professional legal advice.

mmmmm

That depends ... here in Latvia ...

Take my Co's .... should I die - then my Wife would automatically inherit 50% of the shares that are in my name - the other 50% passing to my two Sons split equally. This is when there is no written and agreed alternative between myself and Wife + Sons.
I could have Clauses made in Company Statutes / Contracts - but any change to the 50% inheritance would need Wife and Sons to sign off their interest.
This split system in fact governs all matters here upon death of an asset owner. That includes any Real Esstate etc.

So my point in posting this ... agreed that Directors can 'direct' based on Contract made ... but the Shareholding will be subject to the rules in that state.

Because I have a 'mixed bag' of Companys ... some are with myself as majority Shareholder and others as sole Owner ... this subject comes up at times ... not only that other Shareholders have interest in solution - but also that I am about to turn 70yrs age ...

It really does need professional advice ..

 

[thinwater]

This is also why you should not be intestate. Also, the couples shares could be owned by trust, opening up some additional possibilities, outside of the agreement.