Severance of joint tenancy is the process by which property co-owners change from joint tenants to tenants in common. They may do this due to divorce or separation, for estate planning purposes or to benefit from tax efficiencies. In this article, we answer the most common questions about the process.
Why sever a joint tenancy?
A joint tenancy is a simple ownership model that allows each owner to inherit the other’s share in the property automatically should they pass away. When a couple divorces, they may wish to retain ownership of the property but be able to distribute their share as they wish, and changing to tenants in common allows them to do this.
There may also be tax efficiencies for married couples who wish to rent out a jointly owned property if they swap ownership models to tenants in common as rental income can be allocated proportionally rather than 50/50.
How can you sever a joint tenancy?
You will need to engage the services of a lawyer such as Parachute Law if you wish to sever a joint tenancy. They will ensure the process is conducted lawfully and efficiently, advising you of your rights and responsibilities and updating the title documents with HM Land Registry.
Must all owners agree to severing the joint tenancy?
No. If the joint owners are separated and not in contact, a lawyer will serve a notice of severance to the absent owner, complete the paperwork and supporting documents and send it to HM Land Registry in accordance with the Law of Property Act 1925.
What happens if one owner passes away before the change is complete?
Provided that the severance of joint tenancy notice has been served, this will class as evidence for the intent of changing ownership model to that of tenants in common and the deceased’s share will be distributed in accordance with their last will and testament.
Should estate planning documentation be updated concurrently?
Yes. It is sensible to update your estate planning documentation at the same time as changing ownership model to ensure that your wishes are clearly documented.