{"id":635,"date":"2023-02-09T09:00:00","date_gmt":"2023-02-09T09:00:00","guid":{"rendered":"https:\/\/ctt-group.co.uk\/legal\/?p=635"},"modified":"2023-10-10T11:46:05","modified_gmt":"2023-10-10T10:46:05","slug":"the-benefits-of-severing-the-tenancy-of-a-property","status":"publish","type":"post","link":"https:\/\/ctt-group.co.uk\/legal\/the-benefits-of-severing-the-tenancy-of-a-property\/","title":{"rendered":"Severance of Tenancy: The Benefits of Severing the Tenancy of a Property"},"content":{"rendered":"
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Where a property is owned by more than one person, a severance of tenancy is essential for the majority of estate planning that a co-owner has in place. If a client co-owns a property, a severance of tenancy will be required for any trusts that have been established, as well as if the client has set up a will.<\/p>\n

But why is a severance of tenancy important? What are the benefits, and why is there more than one type of severance available? This article aims to answer these questions and address the main concerns a client may have when severing a tenancy.<\/p>\n

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Types of co-ownership<\/h2>\n

There are essentially two ways a property can be co-owned by more than one person: through a joint tenancy, or a tenancy-in-common.<\/p>\n

In the case of joint tenancy, each joint tenant owns the property in its entirety. A joint tenant cannot give their share to someone else. The key difference is that on the death of a co-owner, the property will continue to be held by the remaining owners irrespective of any will or death planning that the co-owner had in place. This is known as the Right of Survivorship.<\/p>\n

The other way a property can be co-owned is as tenants-in-common. This means each co-owner holds a distinct share of the property, either in equal or unequal shares. Each owner is entitled to deal with their share of the property as they see fit. In this case, a will that your client has signed that references their property will be effective, and any named beneficiaries in that will are entitled to their share of the property as per the terms of the will.<\/p>\n

For your client to hold their co-owned property as a tenant-in-common, they will need to sever the tenancy of the property.<\/p>\n

The wording on the legal title to show a severance of tenancy restriction is as follows and is known as a Form A Restriction:<\/p>\n

\u201cNo disposition by a sole proprietor of the registered estate (except a<\/em><\/p>\n

trust corporation) under which capital money arises is to be<\/em><\/p>\n

registered unless authorised by an order of the court\u201d<\/em><\/p>\n

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Severing the tenancy of a property<\/strong><\/h2>\n

There are several ways to sever the tenancy of a property. This can be done mutually <\/strong>between the co-owners; there can be a non-mutual <\/strong>severance where not all owners are required to give consent; and there can also be an unequal <\/strong>severance of tenancy, which means the property will be held in unequal shares.<\/p>\n

At CTT Group, we offer a Severance of Tenancy service and can facilitate the severance of tenancy on your client\u2019s property using any of the above scenarios.<\/p>\n

It is important to note that the unequal shares will not be recorded specifically on the legal title. While the standard severance of tenancy restriction will appear, it is recommended that a separate deed or declaration is created to confirm the unequal shares.<\/p>\n

An Unequal Severance is available to order through CTT\u2019s Legacy Software<\/a>.<\/p>\n

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Non-Mutual Severance of Tenancy<\/strong><\/h2>\n

A non-mutual severance of tenancy is completed when one of the proprietors is unwilling or unable to sign the legal severance documents. This is commonly used where one of the co-owners lacks mental capacity, or if the co-owners are no longer in contact.<\/p>\n

The key difference with a non-mutual severance of tenancy is that the Land Registry requires evidence that notice was given to the co-owner who has not signed the legal documents. This is to ensure that all owners to the property are aware of the severance of tenancy taking place.<\/p>\n

It is important to note that a non-mutual severance is just as effective as a severance signed by both parties. The end result of both will be a standard Form A restriction on the legal title which reflects that the tenancy of the property has been severed. Once the restriction is registered, there should be no dispute as to how the property is held.<\/p>\n

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The benefits of severing a tenancy<\/strong><\/h3>\n

There are many client benefits to severing the tenancy of their property. These include but are not limited to:<\/p>\n