The pitfalls of owning property jointly with another

The law is “double-Dutch”: Geoffrey Boycott

The pitfalls of owning property jointly with another

This week has seen former England cricketer and well-known Yorkshireman, Geoffrey Boycott, appear at the High Court in London expressing his view that the law surrounding joint ownership of property is unclear. Mr Justice Vos hearing the case himself acknowledged the “obscurity” of property law which dates back 300 years.

The case centres around Boycott’s purchase in 1996 of a three-bedroomed property overlooking Poole Harbour in the millionaires’ resort of Sandbanks, Dorset. The property was purchased for £450,000 and earlier this year was valued at £3 million. Boycott purchased the property with his then partner, Anne Wyatt, and it was put into their joint names as ‘joint tenants’. When property is owned as joint tenants upon the death of one owner their half share will automatically pass to the other. This is commonly referred to as the ‘rule of survivorship’. This type of joint ownership is usually preferred by married or cohabiting couples as it provides security on death for the surviving spouse/partner which is particularly important where there are children of the family.

The alternative to owning a property as joint tenants is to own it as ‘tenants in common’. As a tenant in common it is open to you to make provision in your Will for your share to pass on your death to a third party. In the absence of a Will the rules of Intestacy apply which may result in your share passing to one or more prescribed family members which may not be what you want. For example, if you remain married your share could pass to your spouse, even if you are separated.

Purchasing a property as joint tenants is not unchangeable. It is open to variation by either owner. By serving a ‘Notice of Severance’ upon a joint owner it can be changed to a ‘tenancy in common’, giving one party the option of leaving their half share to a third party under the terms of their Will in the event of their death.

This fact came as somewhat of a shock to Geoffrey Boycott when, in 2009 on the death of his former partner, he discovered that she had two years earlier unilaterally changed the joint ownership to a tenancy in common and had bequeathed her half share of the property to her niece. It is Mr Boycott’s case that he and Ms Wyatt had agreed that upon their deaths their respective shares would pass to the other. He says that had he known that the ownership could be altered he would never have bought the property with Ms Wyatt, who had continued to live in the property rent-free.

To change the ownership of a property from a joint tenancy to a tenancy in common one party must ‘serve’ upon the other a Notice of Severance in accordance with section 36(2) of the Law of Property Act 1925. Section 196 of that Act sets out the method of ‘service’ which essentially means sending a written document to the co-owner at their last known home or business address. It need not be acknowledged by the co-owner.

In Mr Boycott’s case, in which he is making a claim against his solicitors who dealt with the purchase, he claims that it was a “huge surprise” to him to discover on Ms Wyatt’s death that she had unilaterally changed the ownership of the property to a tenancy in common and had left her share to her niece.

This case highlights the importance of fully understanding the implications of owning property jointly with another, particularly in the event of the death of one party or the breakdown of the relationship.

If you require advice regarding financial and property matters as a result of the breakdown of your relationship or protecting your assets when entering into marriage or a relationship then please contact Sophie Key or Amy Walpole in our Matrimonial Department on 01603 675648 or email matrimonial@rogers-norton.co.uk.

If you would like to discuss the preparation of a Will then please contact Tom Lawrence or Louisa Mawbey in our Private Client Department on 01603 666001 or email web@rogers-norton.co.uk.

If you are purchasing a property in joint names and require a conveyancer and advice in relation to joint ownership then please contact Hayley George in our Residential Conveyancing Department on 01603 675623 or email hlg@rogers-norton.co.uk.