Severing Joint Tenancy: Changing Property Ownership After Separation

One of the most important tasks to attend to after separating is to divide any assets and property you have owned with your spouse during your relationship. 

Formalising a property settlement that outlines how your assets will be split ensures that there is no ambiguity and minimises the potential for conflict in the future.  Sometimes this process can take a while, particularly if negotiations are required to reach an agreement, and there may be concerns over the way in which high-value assets such as the marital home or any investment properties will be treated.

How Real Estate/Property is Owned

When a couple buys a house or property, it is usually purchased as either:

1. Joint Tenants

or

2. Tenants in Common.

If you buy a property as joint tenants, it means that together you have equal and undivided ownership of the property.  If one spouse passes away and ownership is held in this manner, the principle of “right of survivorship” will apply and the surviving spouse will automatically inherit the property.

If a property is purchased as tenants in common, you each hold a specific ownership or interest in the property.  For instance, you might each hold a 50% share of a property, or it could be a defined share such as 60% or 40%.  If one spouse passes away under this form of ownership, the remaining interest does not automatically pass to the other spouse as property owner.  What happens to their portion or share of the property is determined by their Will and it will pass on to the beneficiary they choose.

What Happens When a Couple Separates

When a couple separates all of their assets – home, other property, shares, cars, savings, superannuation etc – are combined into an overall “asset pool” and divided between the parties. 

Following separation, it is important to consider the way in which you and your former spouse own real property.

If a property forms part of the asset pool to be divided after separation and it is held in a joint-tenancy arrangement, you may wish to change the ownership arrangement to tenants in common.  This can offer some form of assurance that, should anything happen to you before the property settlement is finalised, the property does not automatically transfer to your former spouse and you can nominate who should receive your interest in the property in your Will.

By severing a joint tenancy, the ownership arrangement will switch to tenants in common in equal shares.  If you wish to sever the joint tenancy, you will not be required to make a stamp duty payment for the change in ownership arrangement and it is not even necessary for the other spouse to provide consent to the process.  The Land Registry will need to be given contact details of the other party; however it is only to ensure that they are made aware of the change in ownership. A notice will be sent to the other party by the Land Registry advising them that the change in ownership will take place in 28 days. It is important if you do sever the tenancy that you ensure you have a properly prepared Will in place as once the tenancy is severed, your 50% share in the property would form part of your estate should you pass away before your family law property settlement is finalised.

It is not necessary to sever a joint tenancy arrangement after separation, however it is important that you obtain professional advice tailored to your own individual circumstances so that you can determine what is the best action in your situation.

If you are unsure of the ownership arrangement on your property, your family lawyer can conduct a Title Search that will confirm the ownership structure.  They can also provide advice as to whether it would be in your best interest to sever joint tenancy and can assist you through the process.

If you would like advice regarding a property settlement, contact the Family Law team at Lamrocks on 02 4731 5688 for professional, discreet, and easy to understand advice.