Jointly Owned Property: Considering Your Beneficial Interest
Posted on in Family Law
Where a property is conveyed into the names of more than one person, a decision must be made as to how the equitable interest in the property is to be held.
There are three ways in which co-owners may hold property:
1. Joint tenancy
This means that you and your partner hold the property in equal shares, but in relation to third parties you have the characteristics of a single owner. If one of you were to die, the deceased's share would pass automatically to the survivor. It would not pass under the terms of the deceased's will. This is known as "the right of survivorship".
2. Tenants in common in equal shares
This means that you hold the property in equal shares, but if one of you were to die, the deceased's share would pass under the terms of his or her will or (if they do not have a will) the intestacy rules, and would not automatically pass to the survivor, unless the survivor is named as a beneficiary in the deceased's will. This arrangement is usually relevant in circumstances such as separation, where one or both parties no longer wish the other to inherit automatically in the event of their death.
3. Tenants in common in unequal shares
The same rules apply as with a tenancy in common in equal shares, but the shares are defined as unequal, either expressed in percentage terms, as a fixed sum to one party with the balance to the other, or in such proportions as the parties may agree.
*Note: The term "tenancy" in this context means "ownership" of property. It should not be confused with a landlord and tenant arrangement.
Disputes regarding equity in unmarried relationships
Where there is a dispute between parties who jointly own a property, the starting point is to establish how the property is held, namely under which of the three arrangements listed above. This enables you to determine your respective shares, and those of your former partner, in the equity of the property.
Please contact us, and we would be happy to assist you in establishing your position.
Severing a joint tenancy
Where a property is held as a joint tenancy, either party may serve on the other a Notice of Severance, which will have the effect of converting the ownership to a tenancy in common in equal shares. In some circumstances, Notice of Severance may convert the ownership to tenancy in common in unequal shares, but this should be supported by a separate document called a Declaration of Trust, which will clarify the parties’ respective shares. If you choose to sever the joint tenancy, it is also important to review your will, or to make one if you have not already done so.
There are various considerations when deciding whether to serve a Notice of Severance, including the following:
- Do you wish your partner to inherit from your estate in the event of your death?
- Do you have children with your partner, or other dependants, whom you wish to benefit on your death? If so, do you trust your partner to make this provision voluntarily if your share passes to them on your death? If not, you should consider severing the joint tenancy and make the relevant provisions in your will.
- If financial claims between you and your former partner have not been resolved following separation or divorce, your former partner may have a potential claim against your estate. If your personal representatives are left with the difficult task of dealing with such a claim, the associated legal costs and any award made to your former partner will reduce the value of your estate. If you choose to make reasonable provision for your former partner by will, the risk, time, and cost involved are likely to be reduced.
How Tozers can help
If you decide to sever your joint tenancy, this may be achieved by serving notice on your former partner in the prescribed form. Please contact us with your instructions, and we will be pleased to attend to this on your behalf. As noted above, we strongly recommend that you review the terms of your will in conjunction with these considerations.