Severing Joint Tenancy or Tenancy in Common: When and why?

What is a Deed of Severance and Joint Tenancy?

  • Joint tenancy is usually chosen by married couples or those who intend for the property to be held in a way that automatically goes to the other on death.
  • Irrespective of what it says in the will. The will cannot then determine where one parties share will go.
  • Presumption of equal shares in beneficial ownership

Even if there is unequal financial contribution to the purchase price or to the maintenance of the property there will still be a presumption of equality. So be careful how you hold a property if there is to be differing contributions in the future

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Tenancy in Common

If one person dies the property passes under the will. If the person does not have a will then it passes under intestacy.

  • Tenancy in common is usually chosen by cohabiting couples or commercial reasons
    This is the safest way to hold a property if the owners are not married.
  • You should have a will
    Otherwise the property may inadvertently pass to persons you didn’t intend under intestacy.
  • Presumption of unequal beneficial ownership
    Even if you do not have an expressed agreement such as a declaration of trust or cohabitation agreement then there is a much stronger chance you can argue that there were unequal contributions and hence that the property should be split in accordance with the agreement or in accordance with the contributions made

Why Sever?

On death if you do not wish your share of the property to go to your spouse or partner you would need to sever the joint tenancy into a tenancy in common. You might wish to put in more money into the property. But there may be a strategic reason when not to sever, for example if your partner or spouse is more likely to die first. In such a case you would want to have the property held on a joint tenancy basis so it passes automatically to you.

When to Sever?

  • Relationship on the rocks, separation, or divorce.
  • Inheritance planning tool:
    You may wish to give the property under your will so as to avoid your estate bunching up with your spouse’s estate and going over the nil rate band. What you would wish to avoid is to waste the Nil Rate band or not make use of the opportunity to reduce the size of the estate without the opportunity of making lifetime gifts taken into account for tax if you died within 7 years.

How to Sever?

By a notice of severance. This has to be properly served on the other co–owner. Once served there is no going back as it is unilateral and only one party need serve the notice. You should then register the severance with the Land Registry.

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