How To Effectively Sever a Joint Tenancy: Legal Insights and Steps
When the matter comes to joint tenancy it is the generic form of ownership of property where two or more people are holding equal property shared with the rights of survivorship.
It indicates that in situations where one joint tenant dies, their share passes onto the surviving joint tenants automatically.
However, some conditions often arise where there are one or more parties who wish to serve the joint tenancy, converting it to tenancy in common.
Let us now uncover the legal complexities and the things involved for a joint tenant to ensure a seamless and legally proficient procedure.
Understanding Joint Tenancy vs. Tenancy in Common
To understand how to dissolve joint tenancy, it is important to assess the differences between joint tenancy and tenancy in common and the effects of each.
The right of survivorship is one of the important aspects of joint tenancy when the parties own the property equally and have equal stakes.
However, it also means that all individuals holding the joint tenancy must agree upon any action regarding the property.
However, in a tenant in a common scenario, the parties can have their specific share and percentage of ownership in the property, and it can differ.
The common law concept of the right of survivorship is not applicable in this context; each tenant’s interest is assignable to others or passed on to his/her heirs.
The above structure offers more versatility when it comes to ownership and decision-making compared to the previous one.
Reasons for Severing a Joint Tenancy.
Personal Disputes
Disputes that may arise in the tenancy agreement include disagreements on general perception, choice of lifestyle, or moral issues. They may cause dissatisfaction and conflicts, which makes joint ownership to be cumbersome.
For instance, issues that affect the property may include management, access control, or important decisions like selling or extending a property, which may cause one co-tenant to desire to end the joint tenancy.
Another advantage of the change of tenancy to tenancy in common is that every tenant has more power over the extent of the share of the property, which hampers conflict.
Estate Planning
A joint tenant may desire to determine who the winners of his/her share of the property are after s/he is gone.
In a joint tenancy, this is the tenancy by the survivor, meaning that on the death of any of the tenants, the share that belonged to the deceased automatically goes to the other surviving joint tenant.
This can be an issue when it comes to filing an estate as most people would wish to bequeath their share to other beneficiaries other than the joint tenant.
Breaking the joint tenancy and turning it into a tenancy in common helps the tenant to leave the property bequeathed according to his or her wishes. Thus, the estate planning goals are achieved.
Financial Reasons
It can be useful to outline the reasons for a joint tenant seeking severance as being either the result of ‘pressure’ or an ‘opportunity.’
A tenant might require cash from the share of the property to attend to some emergencies, such as paying bills, investing in business, or meeting medical bills.
Or a tenant might find out that the market is ripe for selling the properties and may wish to make good his/her investment.
In such situations, the breaking of joint tenancy gives the person a legal way to sell or mortgage the share.
Investment Purposes
The joint tenants may have different objectives with investment, and this is likely to cause a disagreement on the way forward.
For instance, one tenant might wish to use the share of the property, in this case, his or her property, as security for a loan, improve it, or sell it and reinvest the proceeds in other projects.
The reason why joint tenancy can prevent such actions is that all tenants on the premises can equally make major decisions.
The legal action of terminating the joint tenancy and entering into the tenancy in common allows each tenant to work on their goals and objectives regarding property investment without requiring that all the other tenants agree on similar ideas.
Divorce or Relationship Breakdown
In situations where a couple no longer wishes to be together as man and wife, dissolving a joint tenancy is often mandatory for property and wealth distribution.
Joint tenancy can be a celebration of a loving relationship, and maintaining such a presumed harmony after parting can be quite difficult emotionally and practically.
There are several reasons why converting to a tenancy in common is desirable: it avoids entanglements with what the couple wants to do with each home or unit, it simplifies the division of property, and it allows each spouse to sell or use his or her share of the property as necessary.
Tax Implications
Some expectations lead to the breach of a joint tenancy, with tax implications being one of them.
For instance, the use of tenants in common may make sense when there are tax advantages afforded to owning property in such a manner in some jurisdictions or at times.
People who feel that they are subject to high taxes or who wish to alter their tax process may find that they prefer to change their status from joint tenants and hold the property as tenants in common.
Conclusion
Termination of joint tenancy is a legal decision that must not be taken lightly, but rather, it must be done together by following every procedure provided by the law.
No matter the reason for desiring a transition ranging from personal vendettas to estate planning as well as for the sake of financial gain, it is important that these legal procedures and procedures are recognized and their steps taken and adhered to to achieve a tenancy in common.
You May Like Also: