Severance of Tenancy

What is a Severance of Tenancy?

• Normally, when people buy a property together, they purchase as Joint Tenants, meaning that they both own the whole of the property.  When a Severance of Tenancy occurs they become Tenants in Common instead.
• Becoming Tenants in Common means you each own a percentage of the property – usually 50% each but you can define the portions into unequal shares if you wish, for example, if you have put a disproportionate amount of funds into the purchase of the property.
• More often than not the application is done mutually by both parties, however this is not necessary and can be done by one party alone as long as the joint owner is notified. This is useful when divorce proceedings are considered and there is a need to avoid your share of the property transferring automatically to your spouse if you should die before the financial situation is resolved.

What are the benefits of Severance of Tenancy?

• A Protective Will Property Trust is only effective if the tenancy is severed.
• If joint owners have contributed unequal funds towards the purchase of a property and the tenancy is severed into defined portions, the proceeds of sale will pass to the right beneficiary under the terms of the owner’s Will.
• If a Severance hasn’t taken place and one of you dies, the property will automatically transfer to the other owner – severing the tenancy avoids the automatic transfer to the joint owner and your share can be protected for someone other than your partner.
• When there is a Severance and a Protective Will Property Trust - if you die and your joint owner change their mind about their choice of beneficiaries this will not affect your decision thereby protecting your chosen beneficiaries.
• No one likes to think about their spouse re-marrying after they have died but it could happen and in doing so any existing Will they had would become void. The new partner would inherit whatever your spouse owned should they predecease them, meaning your estate could pass to your spouse’s new partner and not your children. Severing a tenancy is the start of you protecting your share of your property for your loved ones.