Property Ownership & Severing A Joint Tenancy

One of the first things a lawyer will discuss when you buy a property together is the difference between owning the house as joint tenants or tenants in common. And they will tell you that when it comes to planning your estate, how you own or ‘hold’ your property makes a difference.

Severing A Joint Tenancy

A joint tenancy means both people own the whole property together. There is no division of ownership. Instead, tenants in common own a share of the property, equal or a specific percentage.

Severing a Joint Tenancy is done when couples are splitting up, to protect their assets during their lifetime or to safely pass them on. Severance can be done with or without the agreement of the other joint owner or by each party signing a written notice and then updating the ownership position with the Land Registry. Bringing a joint tenancy to an end doesn’t change who owns the property, only the way people own it.

Joint Tenancy – Example

Brian and Betty own their property as joint tenants. When Brian dies the property automatically passes to Betty by survivorship. A year later, Betty requires care. As Betty owns the property outright, the total value of the property is included when Barbara’s assets are assessed for care costs.

Tenants In Common – Example

Paul and Michele own their property as joint tenants. They each make Wills, leaving their house to their children. However, Paul doesn’t want to end up like his mother Betty, so he and Michele sever the joint tenancy, becoming 50/50 tenants in common. They leave their 50% share in Trust to their children, with a life interest provision for each other.

Michele dies in 2020. Paul requires care in 2021. Michele’s 50% share is safeguarded for the children and isn’t included in Paul’s assets list.

The Importance of Case Law

The recent case of Dunbabin & Ors v Dunbabin [2022] EWHC 241 in February 2022 centred around whether the couple had severed beneficial joint tenancy before they died.

Angela and John Dunbabin were married and had four sons. They bought their (unregistered) property in 1983 in joint names. They didn’t make any declaration about beneficial ownership but made mirror Wills at the time, appointing each other as the executor with two of their sons as replacement executors.

They wanted their home to be held on trust for the survivor to live in, passing to their four sons in equal shares on the death. They did not issue a formal notice of severance, but an explanatory letter confirmed: “half of the house” was to be left to the four sons on the first death, with the survivor keeping whatever was left.

Late in life, Angela and John both moved into a care home. After Angela died, John made a new Will, appointing his son, Simon who had cared for them both in old age, as sole executor. This Will left 75% of the residuary estate to Simon, with the three other sons sharing the remaining 25%.

The High Court decided that the beneficial joint tenancy was severed when the couple made their mirror Wills. Simon received £250,000 and his three brothers (the claimants) received £83,333 each (double the amount if ownership was proven not to be severed).

Our Advice

Whilst this case shows that severance can occur without serving a formal notice, nothing should be left to chance. Every case is unique and personal circumstances change, so it’s important to get help from a professional. After all, your property is likely to be the largest (joint) asset you will have.

For further information or advice, please contact us. We’re here to help.

Please note that all views, comments or opinions expressed are for information only and do not constitute and should not be interpreted as being comprehensive or as giving legal advice. No one should seek to rely or act upon, or refrain from acting upon, the views, comments or opinions expressed herein without first obtaining specialist, professional or independent advice. While every effort has been made to ensure accuracy, Curtis Parkinson cannot be held liable for any errors, omissions or inaccuracies.

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