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JOINT OWNERSHIP OF PROPERTY
Most clients, when I ask them, are not aware that there are two ways of owning property jointly.
The first method is called a joint tenancy. In this case neither of the joint owners is deemed to own a clearly definable share - rather both are considered to hold it all. The logical result of this is that if either dies the other automatically takes the whole property, regardless of what is in the deceased's will, or if there is no will, the rules of intestacy. This is the usual way for a couple who are getting married for the first time to hold property. The rules of intestacy govern what happens to a deceased's estate, if that person has left no valid will.
The second method is called a tenancy in common. In this case each of the joint owners is deemed to have a clearly definable share in the property. That is not a physical share but an entitlement to a calculable amount of the value of the property. This is often 50% but not necessarily so. In the event of death of one of joint owners, that clearly defined entitlement passes under the terms of the deceased's will, or if no will, the rules of intestacy. This is the usual way for business partners to hold property.
There are many circumstances in which it is preferable to hold a property as tenants in common rather than as joint tenants. There may have been unequal capital contributions at the time of purchase. One owner may wish his or her share to be divided in a particular way, commonly the case if for example there are children by a previous marriage.
Cohabitants (those living together outside marriage) should carefully consider how they want to own the property. Sometimes conveyancing solicitors involved in a purchase will fail to ask clients this question - but it is of vital importance. The question to ask is whether in the event of your death you would wish the entirety of the property to pass to the other partner.
If a marriage or relationship is going through a difficult period, and particularly if divorce proceedings are contemplated, the position should be reviewed. If the property is held as joint tenants then you may consider it advisable to sever the joint tenancy and convert it into a tenancy in common.
I can explain to you how your property is held, after a Land Registry search has been made.
In order to sever the joint tenancy it is necessary to serve a notice of severance on the other owner. This can cause ill feeling but must be served if the decision has been reached that severance is advisable.
However, severance is not usually in and of itself sufficient to achieve the object of the exercise. If a husband severs, then although the property will no longer automatically pass to the wife on the husband's death, it will still go to her if it so states in his will; and all or most of it will go to her under the rules of intestacy, depending on the value of the property. Therefore it is important to look at one's position on death. If a will has already been made it should be reviewed. If a will has not been made then very probably a will should be made as soon as possible.
A number of miscellaneous points:-
More than two people can own property jointly
If the terms of holding the property as tenants in common are less than absolutely straightforward a separate document is entered into setting out the terms. This is called a Deed or Declaration of Trust.
A notice of severance is served on the other joint owner who should then return one copy by way of acknowledgement. That is then sent to the Land Registry who will register the severance and conversion from joint tenancy to tenancy in common.
The terms of a Declaration of Trust can be complex and legal advice is needed here.
It is very important to understand the two types of joint ownership, the effects of each type, and the importance of considering the overall position if there are problems within the relationship.
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