If you decide to change the way your property is owned, it is important to weigh up the advantages and disadvantages. When it comes to the severance of joint tenancy, it can be difficult to navigate all the legal intricacies. This means you may find yourself agreeing to things unwittingly, so let’s provide some clarity and identify the key changes to be aware of.
Benefits of a severance of joint tenancy
One of the best changes when switching to a tenants in common arrangement is the streamlining of ownership shares. It is far easier to divide the shares of the property and bequeath your shares in a will as opposed to the right of survivorship with a joint tenancy agreement.
It is also far easier to manage individual shares of the property. Debts or disputes regarding finances become easier to resolve, as one owner’s debts will not directly affect the other.
Should you go through a divorce, the legal protection is far greater with tenants in common. It is far simpler to divide property that is already held in predetermined shares than trying to come to an agreement on distribution after relationships have soured.
Disadvantages of a severance of joint tenancy
Easily the biggest drawback is the loss of ownership rights, which can lead to disputes. The loss of the right of survivorship can be a huge drawback, depending on your personal circumstances, and can cause you difficulty with inheritance.
You are also more liable to creditors’ interests and tax consequences, both of which may cause you to lose money. Obtaining professional help is vital for understanding all the tax implications. You can find legal experts online who cover everything from declarations of trust to the severance of joint tenancy agreements.
There are also legal implications to consider, which can become more complex with deaths or divorces. These include tax repercussions and redistributed assets and can even affect estate planning.
Once you have considered all your options and consulted a specialist, you can decide whether the change is right for you.
How joint ownership works and why it ends
Before weighing up whether to sever a joint tenancy, it helps to be clear about what the arrangement involves. A joint tenancy is a form of shared ownership in which two or more people together own land, a business premises or a home.
There may come a time when one of the owners needs to be removed, or wants to remove themselves, from the arrangement. Sometimes this is for positive reasons, but more often it follows divorce or a death. When a spouse or civil partner dies, for example, ownership passes to the surviving owner, who then holds the property as a sole owner.
Severing a joint tenancy is a legal process that has to be carried out correctly, and courts have been strict about how notice of severance is given. Small slips in procedure can undo what you intended, so an experienced property solicitor who understands your wishes is essential.
How a notice of severance changes ownership
In a joint tenancy, both owners hold the whole property equally, and if one dies their share passes automatically to the survivor. Severing the tenancy turns the arrangement into a tenancy in common, where each person owns a distinct share that can be sold independently or left to someone else in a will.
The process is fairly straightforward. It usually involves serving a notice of severance on the other co-owner, and it can be done unilaterally, so one owner can make the change without the other’s agreement. Once it takes effect, each owner has clear, separate legal rights over their own share.
This matters most during a separation or divorce, when one person may not want their share to pass automatically to their former partner. It also helps anyone who wants to secure their share for children or other beneficiaries, rather than leaving the whole property to the surviving owner by default. A solicitor who handles severance can make sure the notice is served correctly.