My magic postbag reveals an enquiry about joint tenancies and how to sever them. Sounds painful – what’s that about then?
Well, most couples who own property own it jointly in one of two ways. They will own it as either:
- beneficial joint tenants; or
- tenants in common
Beneficial joint tenancy
This means that you own the property jointly and neither of you can point to a specific share in the property. You will both need to consent to a sale or a re-mortgage. Most importantly, you cannot leave instructions to a lawyer to pass on your interest in a beneficial joint tenancy under your Will. This means that when you die, your interest in the property passes automatically to your fellow joint owner or owners.
Tenancy in common
You still own the property with your fellow owner but you will both have distinct shares. This may be 50/50 or 70/30 and so on. You can sell your share or charge it (raise a mortgage loan on it). But, if you die, your interest will not pass automatically to your joint owner but will instead go to the person you have named as the beneficiary under your Will. You can therefore see that it is vital that you have a Will in place if you have a tenancy in common. If there is no Will, or the Will is deemed to be invalid, there will be an intestacy and your share may go to someone you’d rather not benefit.
Severing a beneficial joint tenancy
Don’t panic. Not a drop of blood in sight. A severance means that you wish to change a beneficial joint tenancy into a tenancy in common. So why would I want to do that, you ask?
Well, one example, familiar to my clients, is a situation where divorce proceedings are being pursued or are being contemplated. The spouses or partners are suddenly out of love and fighting for their share in the equity (the value of the property after taking off any mortgage charges and sale fees). In those circumstances they are not best pleased to hear that, should they die before the completion of the divorce process, their share will automatically pass to the other, surviving, spouse. To prevent this happening, your solicitor can prepare a Notice of Severance. Once this document is signed and sent to your spouse it has the effect of ‘severing’ the beneficial joint tenancy and converting it into a tenancy in common. Then, of course, you will be told to prepare a Will, pronto, to define where your ‘severed’ share in the property should go in the event of your death.
At the same time, whilst dealing with a new Will, it would be necessary to change the executor of your Will as your old Will may say it will be your (soon-to-be-ex) spouse. The decree absolute in divorce would set aside your spouse as an executor anyway and this would leave your estate without an administrator if additional executors were not appointed.
If you have a solicitor acting for you then they would normally ask you to sign two copies of the Notice of Severance, and both would then be sent to your spouse (or their solicitors). A request would be made for one of the forms to be signed and returned so that this version (bearing both spouses’ consent) can be registered at District Land Registry and the record of the property ownership will be amended.
Anyone contemplating preparing a Notice of Severance and sending it to their spouse or partner should think carefully and take advice. Even if divorce is inevitable, there may be children of the marriage. If you were to die before the divorce is finalised, would you really object to your spouse automatically being given your share of the beneficial joint tenancy which would then ensure there was a home for your children?