Severing Joint Ownership on Divorce


There are two ways in which property can be jointly owned. Firstly, people may own property as beneficial joint tenants. This type of ownership means that should one of the parties die, the property will automatically become wholly owned by the remaining joint tenant(s). This form of ownership is commonly used by married couples. Secondly, people can own property as tenants in common. A tenancy of this kind means that each party owns a share in the property and, should a tenant die, the share in the property does not automatically pass over to the other tenant(s) but passes to the deceased person’s beneficiaries.
Sometimes, joint tenants may wish to sever their joint tenancy and become tenants in common instead. This is a common occurrence when a marriage or civil partnership breaks down, as it means that should one of the ex-partners die, their interest in the property will not become their ex-partner’s by default but will pass to the person(s) of their choice. A joint tenancy can be severed quickly and easily.
There are several other circumstances in which severing a joint tenancy might also be appropriate, for example where one partner wishes to borrow money and transfers their interest in a property to their partner in order to reduce the latter’s financial risk.
It is important to remember that should you or your partner commence proceedings for divorce or dissolution of a civil partnership after the joint tenancy has been severed, the severance has no effect on the outcome of the proceedings.
For severance to occur, a formal notice of severance is required. Merely applying to the court for financial provision including a property adjustment order does not mean that a joint tenancy has automatically been severed. Where severance has occurred, the court still has the power to adjust property ownership rights depending upon what each spouse owns.
It is very important that no matter which legal form of ownership of property you use, you have a valid will which is kept up to date.
Also, the manner in which property is owned impacts upon its tax treatment. It is therefore advisable to obtain professional advice on your individual circumstances.

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