There are several clear advantages to a joint tenancy agreement, which allows two people to share equal rights to a property. Relationships can, however, change, and the joint tenancy may no longer be appropriate. The process to sever a joint tenancy is not as complicated as you may think and may be in both of your best interests.
What is a joint tenancy?
A joint tenancy is when two or more people purchase a property as equal partners. It is particularly common for spouses or those in long-term committed romantic relationships. You each have the same rights as owners, and you also have the same responsibilities.
This kind of shared agreement comes with several legal implications. First, there is the fact that rights to the property are split completely evenly. You own 50%, your partner owns 50% (assuming there are two of you). The second is that if you die, your 50% will automatically be transferred to the other half of the tenancy. They would become the full owner under the principle of survivorship. This also means you cannot choose to leave your share of the property to someone else in your will.
Why would you sever a joint tenancy?
The most obvious reason for the severing of a joint tenancy is that the relationship between the owners has broken down. For example, a married couple may be considering divorce. Changing the tenancy will not stop you from both owning the house, but it does mean your estranged partner will not automatically inherit your half. You can dispose of your share in the way you see fit. Some people may also want to sever a joint tenancy for tax purposes, or as a way to control property income.
How to sever a joint tenancy
Severance of joint tenancy may sound complicated, but all you really need to do is follow three basic steps. Some issues, such as deciding on how to divide the beneficial interest, may be easier to manage with the help of solicitors. Firms such as https://www.parachutelaw.co.uk/severance-of-joint-tenancy Parachute Law specialise in this area and can advise on potential complications if you are unsure.
You cannot sever unless your property and tenancy are already registered at the Land Registry. You do not, however, have to secure the consent of your co-owner. You merely need to serve them with a valid notice of intent. They do not even have to formally acknowledge receiving the notice.
Once you have formally given notice, you or your legal representative needs to fill in what is called a SEV form. This form, a copy of the notice and any supporting documents need to be sent to the Land Registry, which will officially change your status from joint tenants to tenants in common.
What is the impact of severing a joint tenancy?
After a tenancy has been severed, you and the other owner(s) become tenants in kind. You both still own the property, but not necessarily equally, and you will not automatically inherit. You should alter your will to make specific provision for the disposition of your share after your death. What severing the tenancy does not do is allow your former partner to sell the property without your permission. It also should have very little bearing on any financial settlement in a divorce.
Whether caused by the breakdown of a relationship or merely as an attempt to improve your tax status, severing a tenancy is an important and, thankfully, relatively simple step. Just file notice, fill in the form and ensure the Land Registry knows that you intend to become tenants in common instead.