Here you’ll find answers to questions surrounding joint tenancy and altering the joint ownership of a property.
Q.What is a Joint Tenancy?
When a property is purchased in joint names, regardless of the relationship, if any, of the purchasers, that property can be held jointly either as Joint Tenants or as Tenants in Common. If the parties should purchase the property as Joint Tenants, then this means there is a strong presumption that the two of them own this property in equal shares, regardless of financial contributions which each party may have made towards the purchase.
A Right of Survivorship also applies, in respect of Joint Tenancies, whereby in the event of one of the parties dying, that person’s half share interest in the property will pass automatically to the other owner, regardless of whether the deceased owner has made a Will or not.
Alternatively the property can be purchased, in joint names, as Tenants in common. If so, then this means the parties could either own the property in equal shares or, alternatively, own the property in different shares to each other. Therefore when the property is purchased, if one of the parties pays more towards the purchase of the house, it can be agreed that they should accordingly own a larger share of the property than their co-purchaser.
With regard to a Tenancy in Common, there is no right of survivorship, meaning in the event of one of the parties dying, their share in the property would not pass automatically to the other owner but instead will pass in accordance either with their Will or, if they have no Will, the Intestacy Rules.
Q. When purchasing a property with another person, should my conveyancing lawyer provide me with advice regarding whether the property should be owned by us as Joint Tenants or as Tenants in Common?
Yes. It is the duty of the conveyancing lawyer to discuss this matter with the purchasers, prior to the purchase of the house being completed. If the parties are agreeable to owning the property in equal shares, with each retaining the property entirely in the event of the other’s death, then it will be suitable for them to own the property as joint tenants.
However, if they should wish to own the property in different shares, then they will be advised to buy it jointly as tenants in common. It will then be advisable for a Declaration of Trust to be prepared by way of confirmation of each parties’ share in the property. If the purchasers should wish to own the property in equal shares but would not wish the other to retain the property automatically in the event of their death, then once again they will need to be advised to own the property as tenants in common.
Q.What is Severance of the Joint Tenancy?
If a property is purchased jointly as Joint Tenants, it may be the case that one of the purchasers subsequently decides that they no longer would wish their co-owner to be entitled to retain the entire property in the event of their death. If this is the case, then steps will need to be taken in order to sever the joint tenancy.
The effect of severing the joint tenancy is that the property continues to be held by the parties in their joint names, subject to any mortgage which may have been charged against the property. However severing the joint tenancy would mean that instead of the parties owning the property as joint tenants in equal shares, they will own the property as Tenants in Common in equal shares.
In the event of one of the owners dying, the deceased person’s half share of the property would no longer pass automatically to the other owner, but instead would pass in accordance with the deceased person’s Will or, if they have no Will, the Intestacy Rules. Likewise though, if the other party dies, their share will no longer pass to the surviving owner by way of survivorship.
Q.How do I Sever the Joint Tenancy?
Severing the Joint Tenancy is a relatively straight forward task. A Notice of Severance, signed and dated by the party who wishes to sever, will need to be served upon the co-owner. This could be done by simply sending the Notice of Severance to the other party in the post and asking that they sign and date the notice themselves and return it.
Upon return of the Notice of Severance, duly signed and dated by the other party, this will then need to be sent to the Land Registry in order that a Restriction may be entered against the title, to the property, by way of confirmation that the property is now owned by the parties as Tenants in Common. The Land Registry do not charge a fee for this.
Q. What happens if the other party fails to return the Notice of Severance, duly signed and dated?
The Land Registry will only agree to register a restriction, against the title to the property, if they are satisfied that the Notice of Severance has indeed been served on the other party. The best way to prove this is by providing a Notice of Severance which has been signed and dated by the other party.
However, provided the Land Registry are satisfied that the Notice of Severance has indeed been served on the other party, they will then agree to register the required restriction, even if the Notice of Severance has not been signed and dated by the other party.
Who should make the decision as to whether the Joint Tenancy should be severed or not?
This would have to be the decision of the client. Whilst their lawyer could advise them as to the pros and cons of severing a Joint Tenancy, ultimately it is the client’s decision as to whether they would wish to sever the joint tenancy or not. There is no right answer, so the client would have to decide what they feel would be best for them in their particular circumstances.
Severing the joint tenancy can be a double edged sword. By severing the joint tenancy, this will prevent one party’s half share interest in the property going automatically to the other. However likewise, severing the joint tenancy means that if the other party should die, then likewise their share will not pass automatically to the other co-owner.
Q. When should I give consideration to severing the Joint Tenancy?
If at any time you would not wish your co-owner to receive your half share of the property automatically, in the event of your death, then that would be the time to sever the joint tenancy. This is often a matter which is considered when a relationship comes to an end, whether the parties be married or not.
For example, if a marriage were to come to an end, one of the spouses may decide that they would no longer wish the other spouse to receive their half share interest in the matrimonial home automatically, in the event of their death. Instead they may wish to ensure that their share in the matrimonial home passes to someone else, such as their children, in the event of their death. If so, they will need to sever the joint tenancy and would also need to make a Will, in which they can specify, amongst other things, to whom their interest in the matrimonial home will pass to in the event of their death.
Q. What is the cost of severing a Joint Tenancy?
Severing a joint tenancy is not expensive. There is no reason, particularly if the other party co-operates and signs and dates the Notice of Severance, as to why severing the joint tenancy should cost any more than £100.00 at most.
Advice on severing a joint tenancy
If you should have any queries regarding severing a joint tenancy, or have any queries whatsoever regarding a Family Law matter, then please do not hesitate to contact myself by email on firstname.lastname@example.org.
Bray & Bray have three main offices across Leicestershire, feel free to phone or pop in to talk to our solicitors.