Generally, most people own property jointly as Beneficial Joint Tenants which means they own the entire property between them. The significance of this is that when one dies the entire property belongs to the other. It is quite usual when the parties are divorcing and/or separating that they will alter this arrangement by becoming Tenants in Common. That then means each one of them owns their own individual share in the property which will not pass automatically to the other person on death.
How is this change made?
There are a couple of steps required. A Notice called a “Notice of Severance” is signed by one of the parties (or both if they agree) and served on the other party – service is required if they do not agree. Once the agreed Notice has been signed or served the Joint Tenancy is severed and the parties hold as Tenants in Common.
What happens next is Land Registry are notified and an Application made to put a Restriction on the register of Title. This is to let purchasers know that there are separate interests in the property and on any sale of the property two people must give a receipt for any purchase money paid.
Are there any risks?
Usually a Form A is registered but this benefits more the purchaser rather than the owners of the property. What can happen is that if one of the owners dies and the surviving owner wishes to sell the property then it is possible for that owner to appoint the second person to act with them in signing the sale documentation in place of the deceased owner. This satisfies the requirement under a Form A Restriction that on selling the property at least two people give a receipt for the purchase money. In this scenario, the surviving owner would be able to sell the property and receive the monies. The beneficiaries of the deceased owner would in this situation lose out. They would have a claim to pursue against the surviving owner and the person they appointed to act with them but if the money has been spent it would be a hollow claim.
One way of avoiding the risks posed by a Form A Restriction is in fact to register a Form Q Restriction where the written permission to sell is also required from the deceased co-owner’s personal representatives. In that scenario with a Form Q Restriction registered the surviving co-owner is not going to be able to act without also getting the permission of the deceased co-owner’s personal representatives. Ultimately, of course, it is important to take proper legal advice to ensure that you have up to date information and your interests are protected.
For a confidential discussion about joint ownership and protecting the respective interests of on a Divorce/separation, please contact Simon Brown, Family Solicitor at Berry & Lamberts Solicitors by telephone on 01892 526344 or by email on: firstname.lastname@example.org. We offer an initial appointment for £75.