Severance of Joint Tenancy

Severing a Joint Tenancy

Normally, when couples buy a property together, they do so as joint tenants. This means they both own the whole of the property, and ownership automatically transfers to the other owner if one of them dies.

While this arrangement can make sense when a couple first buys a property, it may become unsuitable if their circumstances change. Severance is a process that enables joint tenants to change their legal ownership to tenants in common.

What are Joint Tenants?

Joint tenancy means that in the event of the death of one of the owners, that person’s share automatically passes to the survivor. This is irrespective of whether there’s a Will or intestacy (no Will). Many couples start out as joint owners because it’s a straightforward way to own a property.

What are Tenants In Common?

Tenancy in common means the ownership of the property is held in entirely separate shares. In the event of the death of one of the owners, that person’s share doesn’t automatically pass to the survivor. The share in the property passes in accordance with the deceased person’s Will or intestacy.

This option may be appropriate if one of the owners paid more to buy the property or if there are children from a previous relationship who need to be provided for in the future.

Tenants in common is also an effective way to ensure that only that person’s share would be at risk to any potential care costs in the future.

It means the children or beneficiaries can benefit from the other person’s share of the property. But tenancy in common isn’t dissipation of your assets in terms of care costs; it’s a way of legally protecting your whole house from being at risk of care costs should just one of you go into care.

What is the severance of a joint tenancy?

Severance of a joint tenancy involves legally changing the ownership of property from joint tenancy to tenancy in common. While typically both parties agree to sever the joint tenancy, mutual agreement is not required. One party can serve notice on the other to sever the joint tenancy, regardless of the other party’s consent.

What are the disadvantages of joint tenancy?

The consideration isn’t solely about the drawbacks of joint tenancy itself; it’s primarily about whether joint tenancy suits your needs. Joint tenancy includes a feature known as the right of survivorship, meaning that when one owner passes away, the property automatically transfers to the surviving owner(s).

However, this arrangement might not align with your intentions or those of your co-owner. Because the right of survivorship supersedes a will, severance is crucial if you wish to pass your share of the property to someone else, such as a child from a previous relationship.

Moreover, in the event of a relationship ending, the property remains jointly owned even if one owner no longer resides there. This situation can be problematic and may impede a property sale until all owners reach an agreement.

Why would you sever a joint tenancy?

Severing a joint tenancy changes the ownership structure to a tenancy in common. There are three primary reasons for pursuing this action:

1. Ending the Right of Survivorship: By severing a joint tenancy, you eliminate the automatic right of survivorship. This is crucial for estate planning, ensuring that beneficiaries like adult children receive a share of the property according to your wishes, independent of your partner’s decisions. A tenant in common has greater control and flexibility over their property’s distribution upon death compared to joint ownership.
2. Property Income: For rental or income-producing properties, severing the joint tenancy allows co-owners to receive income in unequal proportions, such as 60-40 or 70-30. Creating a tenancy in common enables co-owners to manage rental income more tax-efficiently and according to their individual circumstances.
3. Separation and Divorce: Severing a joint tenancy is often part of divorce proceedings. It prevents an ex-spouse from automatically inheriting the property upon your death and clarifies each party’s ownership percentage, resolving potential disputes over proceeds from a future property sale. This action helps define financial entitlements post-divorce.

What's the process for severing a joint tenancy?

The steps to sever a joint tenancy are as follows:

1. Agree on Ownership Division: Decide how the property ownership will be divided, such as 50-50, 70-30, or another percentage. A solicitor can assist in reaching an agreement and documenting it.
2. Serve Notice of Severance: Serve a notice of severance of joint tenancy on all other owners. The recipients should acknowledge receipt of the notice by signing an acknowledgement.
3. Address Refusals: If a recipient refuses to sign, obtain alternative evidence of service, such as proof of recorded delivery to their last known address, with guidance from your solicitor.
4. Complete Form SEV: Fill out Form SEV, which is required for severance of joint tenancy.
5. Submit to the Land Registry: Send Form SEV to the Land Registry along with the signed acknowledgement of receipt. The Land Registry will then place a restriction on the title deed, confirming the property is held as tenants in common.

Once these steps are completed, each party can manage their share of the property independently. In straightforward cases where all joint tenants cooperate, this process can be completed in as little as 1-2 weeks.

Can I sever the Joint Tenancy myself?

Yes, theoretically, you can sever a joint tenancy on your own using forms available on the gov.uk website.

However, we strongly advise seeking professional advice before proceeding with any alterations to your ownership arrangements. There are advantages and risks associated with different types of ownership, and a solicitor can ensure you fully comprehend these factors before making any decisions.

Contact Our Property Ownership Solicitors

Choosing the right type of joint ownership is an important decision, so it’s essential for you to talk it through with a professional when planning your finances for you and your family.

Our team can provide you with relevant information and can explain your options clearly and simply.