How can a joint tenancy be severed?

31 Dec How can a joint tenancy be severed?

When looking at buying a property together with another person or persons, it is important to understand the differences and nuances that each scenario involves.

There are four main types of co-ownership available: Joint Tenancy, Tenancy In Common, Tenancy In Entirety, and Coparcenary.

Joint Tenancy

In layperson’s terms, a Joint Tenancy means that, together, the co-owners own the ‘whole’ of a property – as opposed to owning separate, defined shares that make up the whole. There is one sale deed.

If one co-owner dies, their share will automatically pass to the surviving co-owner(s) under the ‘survivorship’ doctrine – as opposed to via a will or intestacy. As such, joint tenancy is commonly seen in cases where a property is co-owned by spouses or civil partners.

Tenancy In Common

This is a type of tenancy where each of the co-owners has a distinct share in the property that is outlined in a Tenancy In Common agreement/contract. The shares do not need to be equal.

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An example of a Tenancy In Common would be where 2 people live in a 2 bed house and they decide to divide it into 2 equal parts (each comprising one bedroom and 50% of the communal areas).

When a Tenancy In Common agreement is in place, if one owner dies, then their share of the property is not automatically passed to the other owner. Instead, it is dealt with as stipulated in the Will of the deceased. The person who inherits will then become a new Tenant In Common.

Tenants In Common means that instead of co-owners together owning 100% and being liable for 100%, they each own the stipulated percentage and are only liable for that share. This makes it more popular in scenarios where one co-owner has contributed a significantly larger share to the initial purchase. It is also seen as the most appropriate tenancy type for business relationships.

What is meant by ‘severance of a Joint Tenancy’?

In this context, severance is a way of converting a Joint Tenancy into a Tenancy In Common.

Why would a Joint Tenancy need to be severed?

Tenants In Common arguably offers greater flexibility than Joint Tenancy, and situations where converting may be seen as desirable include divorce/relationship breakdown, to aid/simplify tax and estate planning, or to protect a property/asset from creditors.

If you need advice about the implications and practicalities when it comes to the severance of Joint Tenancy, expert firms such as Parachute Law will be able to help and guide you through the process.

How can a joint tenancy be severed?

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There are four main ways to sever a joint tenancy:

1. Severance by written notice (Law of Property Act 1925, s.36(2))
2. Severance by an act of a joint tenant ‘operating upon his own share’
3. Severance by mutual agreement
4. Severance by mutual conduct

There are two further ways, but they are very rare. These are Severance in consequence of unlawful killing, and Severance by merger of interests.

The two other types of co-ownership are Tenancy In Entirety (exclusively for properties that are owned by legally married couples), and Coparcenary (only applicable in the case of a Hindu Undivided Family structure). These are, however, far less common than the other two.