April 21, 2020
When purchasing a property with a spouse or partner, it is common for the ownership of that property to be held as Joint Tenants as this effectively recognises that this is a joint commitment.
But what does this mean?
The legal implications of purchasing a property as Joint Tenants are as follows:-
- you hold equal rights to the whole property under a 50/50 division;
- In the event that a joint tenant passes away their interest in the property automatically passes to the surviving joint tenant. This is known as the principle of survivorship;
- your ownership of the property cannot be passed under your will.
Although these implications often do not carry prominence upon the purchase of the property, upon the unfortunate circumstances where a marriage or relationship breaks down, careful consideration should be given as to whether a joint tenancy needs to be severed in the parties’ best interests.
For instance, following the breakdown of a marriage, it may desirable to sever the joint tenancy of the former matrimonial home, so that should they pass away their share in the property does not automatically pass to the surviving spouse.
It is crucial to note that severing a Joint Tenancy has no impact on who owns the property but instead alters the way in which the property is held. Once severed the property will be held by the parties as Tenants in Common.
As Tenants in Common:-
- you can own different shares of the property;
- the property does not automatically pass to the surviving tenant if you die;
- you can pass on your share of the property in your Will or under the rules of intestacy should you not have a Will.
How do you go about severing a Joint Tenancy?
For many this can seem a particularly daunting and complicated process. However, the process to sever a Joint Tenancy is actually fairly straightforward and if done correctly, the right of survivorship is removed so that upon the death of either tenant the property does not automatically pass to the remaining joint tenant.
Severing a Joint Tenancy can be done with or without the agreement of the other joint owner. A notice to sever is served unilaterally by one of the joint tenants. While it may be helpful for the recipient to acknowledge or sign the notice to indicate that they have received it and understand its effect, this is not in fact necessary for the notice to be valid in achieving the severance. Therefore, the crucial element to a successful notice and severance is that it must be validly served.
Having served the notice of the joint tenant, the next step is to register the Tenancy in Common with the Land Registry so that this automatically creates a restriction on the property in the future.
Will severing the Joint Tenancy have any impact on a financial settlement in matrimonial proceedings?
Severing a joint tenancy should not be a cause of concern. If a joint tenancy is severed after divorce proceedings have been commenced, this will have no impact or effect on the outcome of a financial settlement. Nevertheless, it will be necessary to come to a formal agreement by way of a consent order to ensure that it is legally binding.
A further point to note is that your spouse cannot sell the property without your consent regardless of whether the property is held as joint tenants or tenants in common.
Changing your Will
In severing a joint tenancy, it would be sensible to alter your Will to ensure that your interest in the property passes to your loved ones in a desirable manner as per your wishes.