Severing a joint tenancy and what it can mean for couples. There are two aspects to the ownership of property; the legal title to property and the beneficial interests in it (the right to receive the profits/equity or income from a property or the right to live in it). Both may be vested in the same people, but this is not always the case.

Beneficial ownership can be held as joint tenants or tenants in common. Joint tenants have equal rights to the whole property. If one joint tenant dies the whole of the property automatically passes by the rules of survivorship to the co-owning joint tenant. As tenants in common, each party holds their own separate and distinct share and on death their share will not automatically pass to the surviving co-owner and instead passes in accordance with their Will, or if no Will under the Rules of Intestacy. 

From 1 April 1998 the Land Registry form used to complete the transfer of a property (Form TR1) gives purchasers the option of one of the following declarations:

  1. To hold the property on trust for themselves as joint tenants;
  2. To hold the property on trust for themselves as tenants in common in equal shares; or
  3. To hold the property on trust for themselves as tenants in common in some other share.

If joint purchasers do not want to hold the property in equal shares, they can insert the percentages in the TR1 Form or alternatively enter into a separate declaration of trust (also known as a deed of trust). Parties can also declare their beneficial interests in a cohabitation agreement. 

Severing a joint tenancy – changing your beneficial ownership

You cannot swap from being tenants in common to joint tenants.

If you are joint tenants and want to swap to tenants in common, you can do this by ‘severing’ the joint tenancy. Couples often want to change their beneficial ownership for estate planning reasons or because they are separating. 

When severing a joint tenancy parties will automatically be granted equal shares as tenants in common. 

A joint tenancy can be severed by a triggering event or act, by mutual agreement, or it can be severed unilaterally. A simple notice can be served on your joint tenant notifying them you want to sever the tenancy. Where severance is effected by agreement or by notice Form SEV is filed at the Land Registry. The Land Registry will then register a restriction on the proprietorship register.

Unsure how you hold your beneficial interests?

If you are not sure how you hold the beneficial interests in your property you may be able to check against Form TR1 from the time of purchase or other key documents such as a deed of trust, cohabitation agreement or Form Jo. Alternatively, you can order an official copy of the register from the Land Registry. This will confirm the registered legal owners as well as the beneficial ownership. 

If you are tenants in common, there will be a Form A restriction in Section B of the Proprietorship Register. The wording of Form A is as follows: ‘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’.

You will know if you are joint tenants because no restriction is registered against the proprietor’s name in section B of the proprietorship register. 

Seek legal advice and think about entering into a cohabitation agreement

Before you go ahead with changing the beneficial ownership in a property we strongly advise you to seek legal advice. It is important you are fully informed about the consequences and have peace of mind that you are financially protected. We also advise couples to consider entering into a cohabitation or settlement agreement. Both types of agreement enable you to make financial and practical arrangements and provide financial provision for one another or your children in a way that would not be required by law. They can also ensure that the interests of you and your wider family are safeguarded, particularly if family businesses, trusts or inherited assets or family gifts are involved and reduce stress and legal costs at a difficult time in your life.

For more information or advice – contact the team at Watson Morris today.

Written by Caroline Watson

September 30, 2022

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