Severance in Jointly Owned Properties

Joint ownership of property

If a property is in joint names that just tells us who the legal owners of a property are. Up to 4 people can be legal owners at a time. The law sees them as “joint tenants” at law. Tenants does not mean renter in this context. It is a way of owning property.

However, this does not tell us some important information, like how the property value should be split if your relationship breaks down, or what happens if one of you dies. This is because these things relate to something called a ‘beneficial interest’ in the property. This can be different to the legal ownership.

There are two ways to be beneficial owners, as joint tenants and tenants in common.

What’s the difference?

Let’s say that the property is owned by you and your ex.

• If you are joint tenants, the two of you as one entity own all of the property.

• If you are tenants in common, you and your ex own defined shares in the property totalling 100%.

The significance of this if you break up

The way that you hold the beneficial interest, as joint tenants or tenants in common, determines what happens with the money in the property when you separate if you are unmarried (or die).

If you break up and you are married to the other owner

As long as it is just you and your ex who own the property, the courts are not bothered about which of you owns what proportion of the property as it can change this to whatever it wants as part of the financial remedy process on divorce, or order the property sold. The court has wide powers to give the parties what they need, so who owns the property is not as important.

If you are getting divorced and you are joint tenants, you may nevertheless want to change the way you own the property in case you or your ex dies before financial matters are resolved. Look at our section below on ‘severance’.

You should also get advice on protecting your claims when the house is in your ex’s sole name.

If you break up and you are not married to the other owner

Unmarried couples are in a different position, where strict rules apply.

If you are a joint tenant and the relationship breaks down, you would split the equity (the amount left after you repay the mortgage and the costs of sale) equally between you. While you could seek to prove that you both intended you to have a different share of the property, or your shares changed after you bought the property, it will be very difficult to show this. You should seek legal advice in this situation.

Being a tenant in common means that you will have agreed to divide your interests either

• 50-50 (known as tenants in common in equal shares), or

• in a different proportion such as 63-37 or 99-1 or 25-75 or any other shares totalling 100. This is known as being tenants in common in unequal shares.

Most people who are tenants in common also have a declaration of trust saying what shares they each have. These proportions tell you how you divide the equity if you split up.

If you have no specific documentation saying that you are a tenant in common, then the law will presume you are a joint tenant and split 50-50. While you could seek to prove that you both intended you to have a different share of the property, or your shares changed after you bought the property, it will be very difficult to show this. You should seek legal advice in this situation.

The significance of this on death

If one joint tenant dies, the other inherits the property and it does not go under the dead person’s Will. This is called the survivorship rule.

If you are a tenant in common, it works differently. You have a defined beneficial share of the property and you can leave that share in the property under your Will so it will not necessarily be inherited by your ex. In fact, if you are not married and you don’t have a Will, your ex will not inherit your shares. That’s because cohabitants who are unmarried don’t inherit at all under the rules that apply when people die without a Will. (There are proposals to change this.)

Which am I?

On the Official Copies of your title register you will see the names of the legal owner(s). You can get this from the Land Registry website using the instructions here:

NCLS Short Guide on Getting Information about Who Owns a Property

 If you see the words ‘No disposition by a sole proprietor of the registered estate (except a trust corporation) under which capital money arises is to be registered unless authorised by an order of the court’ then this suggests that you may be tenants in common.

If these words are not present, it suggests that you may be joint tenants.

You should also try to obtain the conveyancing file from the lawyer that did your house purchase to see if there is any documentation about whether you are tenants in common or joint tenants, or you might have this information somewhere from when the lawyer wrote to you at the time.

Severance of tenancy

It is possible to change from joint tenants to tenants in common. This is called severance of tenancy.

It is not possible to change the other way, from tenants in common to joint tenants, through severance.

Severance means:

• You each hold the property as tenants in common in equal shares (50-50). It does not change the legal ownership of the property.

• The co-owner won’t necessarily inherit the property automatically if you die

• But you won’t necessarily inherit their share either

• You will need to make a Will once you have severed the tenancy, saying who inherits. This is because otherwise your share might to the other owner anyway if you are married to them. This is because if you die without a Will your spouse will inherit the first £322,000 of your assets and half of the rest.

Severance might be a good idea if you don’t want them to inherit if you died before property issues are resolved. However, think carefully about this. If you and the other owner have children together, you might want them to have the house to care for the children after your death.

Remember that severing the tenancy changes the way you hold the house for both of you. They can also make a Will and leave their share to someone else. If they then die, you and the person they've left their share to would co-own the house

How to sever the tenancy

You can sever the tenancy by serving written notice of that to the other co-owner. Send two copies so they can return one to you and keep the other for their records.

We suggest the following wording:

 
You will need to send the notice to the other co-owner at either their last known home or business in the UK. Do not serve it by email. If you use registered post, they are considered to have received the document as long as it has not been returned to you by Royal Mail.

Once you have served the document, and hopefully the other owner has provided you with a signed receipt, you should complete form SEV at the Land Registry. This will result in some new wording being added to the property title records showing that you are now tenants in common. The wording is ‘No disposition by a sole proprietor of the registered estate (except a trust corporation) under which capital money arises is to be registered unless authorised by an order of the court’. This is known as a Form A Restriction.

There is no fee for filing this document.

If the house is not in my name

Sometimes a person can acquire an unwritten interest in a property  under trusts law, as a result of either financial contribution or shared  intention on which someone has relied in a way that has harmed them. This is a very simplified explanation of a very complicated area of law called ‘trusts of land’. Always get advice if you think this applies to you.

We will have some pages on this area of law on the site at some point, in the section for unmarried couples.