Joint tenancy, tenancy in common and severance of tenancy

This means that each co-owner is treated as entitled to the whole estate (legal and beneficial), rather than to a specific share.

When one joint tenant dies, their interest (legal and beneficial) passes automatically on death by operation of law to the survivor(s). It does not form part of the deceased’s estate and so does not pass by will or under the This only applies to the beneficial interest and means that the co-owners hold the beneficial interest in the property in specific shares. Frequently these are equal shares but do not have to be. The co-owners therefore hold a share in the money value of the property. There may or may not be a formal deed of trust setting out the amount, or proportion, of the co-owners’ beneficial shares.

When one tenant in common dies, their beneficial interest will not pass automatically on death to the survivor(s). Instead, it becomes part of the deceased’s estate and passes under their will (if any) or under the intestacy rules.

In simple terms:
A and B buy a tin of biscuits. There are two elements – (1) the tin (the legal estate) and (2) the biscuits (the beneficial interest).

If A and B are joint tenants they are each entitled to both the tin and the entire contents. If A dies, B gets the tin and all the biscuits.

If A and B are tenants in common, they are each entitled to the tin. However, they will have a specific share (by number or percentage) in the biscuits (and others may be entitled to shares too). When A dies, B gets the tin. However, B is entitled only to his/her own share of the biscuits and must keep A’s share (and any other shares) for whoever is entitled to it (them).

SEVERANCE OF BENEFICIAL JOINT TENANCY

Where there are joint proprietors, the legal estate is always held on a joint tenancy – this cannot be severed. That is to say, two joint proprietors cannot each own a half share in that legal estate. However, the beneficial interest can be held on a joint tenancy of a tenancy in common.

A beneficial joint tenancy may be converted into a tenancy in common by severance.

Severance can occur:

• by formal notice in writing given by one joint tenant to the other(s) during their lifetime, or
• by operation of law, e.g.
  • bankruptcy of one joint owner
  • charging order against one of the joint owners
  • by an act of one only of the joint owners operating on his/her own share, e.g.:
    • by a charge over property created by only one of joint owners (this severs the joint tenancy of the equitable estate and takes effect on the beneficial interest of the chargor), or
    • by a course of dealing by all the joint owners sufficient to indicate that they regarded their beneficial interests as being a tenancy in common, e.g., wills of joint tenants leaving their shares in the property differently.

Bankruptcy of a joint proprietor will automatically sever a beneficial joint tenancy as a matter of law.

The Trustee in Bankruptcy should apply for appropriate restrictions but does not always do so.

However, the Trustee in Bankruptcy of a joint proprietor does not acquire the legal estate but only the beneficial interest of the bankrupt proprietor under a trust of land.

The joint registered proprietors can and must still execute a deed that disposes of the registered legal estate (e.g., a transfer or mortgage) but it is good practice for the Trustee in Bankruptcy to join in and execute the deed to receive the bankrupt’s share of the capital monies arising.

Joint proprietors, as trustees of the legal estate, have the same powers in relation to it as an absolute owner. However, their powers may be limited by the terms of a trust deed or other declaration of trust. If there is no restrictions in the register a third party (e.g., a buyer) can assume that the joint owners, as trustees, have full owners’ powers. Section 26 Land Registration Act 2002 and section 40 (under which restrictions may be entered in the register) bring registered land into conformity with section 16 Trust of Land and Appointment of Trustees Act 1996, which gives a buyer protection in the unregistered land system.

The registrar must enter a restriction in Form A when he enters two or more persons as proprietors and the proprietors hold the land as tenants in common or if it is not clear whether they hold it as joint tenants or tenants in common in equity. This is in order to ensure that any beneficial interests that may exist, but which have not been declared, are overreached. This means that their interest moves from the property to the proceeds of sale.

A proprietor must apply for entry of a restriction in Form A when the estate becomes subject to a trust of land other than on a registrable disposition or the trusts change with the result that the proprietor or survivor of joint proprietors will not be able to give a valid receipt for capital money.

The presence, or absence, of a restriction in the proprietorship register may not, however, be conclusive (e.g., a Trustee in Bankruptcy may not have applied for one or there may have been a severance of a joint tenancy by no application for a Form A restriction or the registrar may enter one where it is not clearly stated whether the proprietors will hold it as joint tenants or tenants in common in equity).

Where a relationship has broken down, the parties will not usually want the property to pass to the other in the event of their death. It is therefore important to consider whether there is a need to serve a notice of severance in the case of any jointly owned property.

If the beneficial joint tenancy is severed, you should apply to Land Registry in form RX1 for a restriction in Form A, with a copy of the notice of severance and a conveyancer’s certificate as to the service of the notice. A conveyancer for these purposes is a solicitor, a licensed conveyancer within the meaning of section 11(2) of the Administration of Justice Act 1985, a fellow of the Institute of Legal Executives, or a duly certificated notary public.

The entry of a restriction does not itself bring about a severance, or create a beneficial interest; it merely reflects the existence, or change, of a trust or beneficial interest(s) or claim(s).

The Land Registry do not currently make any charge for severing a tenancy.

If you have any questions or need any further advice, please do not hesitate to contact us and we will do our best to accommodate you.