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Family law: Who keeps the house in a divorce?

In this, the third in my series of articles looking at the link between family law and other areas of the law, I’m focusing on land law.

Land law is something which regularly creeps in to family law and is an early consideration for clients who are facing the breakdown of a relationship, whether a marriage, civil partnership or cohabiting couple when property is owned by them jointly.

How does divorce affect who owns a property?

A property can be held by joint owners in two ways, either as joint tenants or tenants in common.  It is an important distinction because how you hold the property determines what happens to your share in the event of your death.  I know, lawyers eh?  Always looking at the worst-case scenario.  But that is what you pay us to do –to guard you against the worst case scenarios of life and in order to do that, we need always to be looking at what that might be.

In short, when you buy a property with somebody else you will choose whether to hold the property as tenants in common or joint tenants.  If you choose tenants in common then each owner owns a distinct share in the property.  Maybe that is a 50/50 or 95/5 or whatever other split is agreed.  But your share is your share, and when you die, your share passes in accordance with your Will on to your chosen beneficiaries along with the rest of your estate.

If you choose a joint tenancy, and I think this is a particularly interesting concept, the joint owners each own the whole of the property.  There are no divisible shares and so when you die, you do not have a share in the property to leave.  The rule of survivorship then operates and the owner, or owners, still then living, continuing holding the property together in the same way as before.

When facing the breakdown of a relationship, of any type, a person’s feelings about how they hold a property with someone might change.  If you hold a property with your now ex-partner as joint tenants, maybe you would prefer that in that worst case scenario they don’t automatically continue to own all of the property.  Maybe you would prefer that your share can be left to the beneficiaries of your choice.

How can you protect your property after a divorce?

So what can you do about it?  You can sever the joint tenancy.  Section 36 of the Law of Property Act 1925 sets out the requirements which must be met in order to sever a tenancy and if you comply with them, you can unilaterally sever the joint tenancy, meaning that you then own the property as tenants in common.  In this situation, the severance of the joint tenancy automatically results in you each owning 50%, although that can be adjusted again later separately by way of a financial order. What is important, particularly if you are married, is to ensure that you follow up this act by ensuring that you have a valid Will which leaves your share in the property to the beneficiaries of your choice.

Of course, severing the tenancy is a double-edged sword.  It could benefit you to remain as joint tenants, but it may not.  This is a balancing exercise which only you can carry out.  However, it must be a consideration, so that should the worst happen, fate has not decided for you.

If you would like to discuss any of the issues referred to in this blog please do contact us.

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