When a property is co-owned by two people, it can be held as beneficial joint tenants or tenants in common.
Where a property is held as beneficial joint tenants, the share of the first co-owner to die will automatically pass to the surviving co-owner on death under the Rules of Survivorship. Therefore, the deceased’s interest in the property passes outside of any Will they may have so careful thought needs to be given to whether they would want the co-owner to have the whole property.
If a property is held as tenants in common, then each owner owns a distinct share of the property. This share does not automatically pass to the surviving co-owner on death, and instead passes in accordance with their Will, or where there is no valid Will, under the Intestacy provisions.
Benefits of Severance
Sometimes co-owners who hold a property as joint tenants may decide to change how they own a property to make sure that their share passes under the terms of their Will and not automatically to the survivor.
This can be done by way of a Declaration of Severance which must be served on the other co-owner, and then registered with the Land Registry so that they can update the title to the property. This is called ‘severing the tenancy.’
The updated title will include a specific restriction to reflect the ownership as tenants in common.
Severance of a tenancy can be done by mutual agreement of both co-owners or unilaterally with notice of it being served on the co-owner.
It is very important that any notice of the severance is served correctly. If the notice is found to have not been served correctly, this could lead to issues as to how the share will pass on death.
Severance and Your Will
When making a Will, it is important to know how you hold your property to understand how your property will pass once you have died. This is something that your solicitor can check for you.
Where a property is held as tenants in common, a Life Interest Trust can be included in your Will to protect each owner’s respective share in the property for their chosen beneficiaries, whilst allowing the surviving co-owner to remain in the property for as long as they wish to, or for the rest of their life.
Life Interest Trust Wills can be useful should you wish to protect assets for children from previous relationships Or protect a share of a jointly owned property against the costs of care.
How can Timms help
If you would like more information on any topic within this blog, on making or updating a Will or assistance with Co-ownership, please do not hesitate to contact me on 01332 364436 or via email at E.Facer@timms-law.com. Further details of our Wills and Probate services can be found here.
