Severing tenancy of joint property following separation
Settlement following the breakdown of a relationship does not occur overnight. Dividing your assets with your former partner can take time to ensure you have dealt with all of your property appropriately under the provisions of the Family Law Act. Sometimes there is an urgent need to preserve assets, or your rights, to more significant property such as real estate.
It is critical when seeking family law advice to know the structure of ownership of your property. Ownership of real estate can be held jointly with your partner as joint tenants, or alternatively in particular shares, as tenants in common.
There is no clear “line in the sand” that divides ownership in property between parties when owned as joint tenants. You simply own the property jointly with your partner, and you each have ownership of the whole property. When one of the joint tenants dies, the property automatically passes in whole to the surviving owner.
Owning property as tenants in common means the legal ownership of property is defined by your shareholding. For example, you may own property equally if you are the registered owner of 5 out of 10 shares with your partner, or the property could be owned in unequal shares, such as 90/10. Owning shares in the property means you can direct how your share in the property is dealt with according to your Will, in the event of death, and likewise, your ex-partner can do the same.
Therefore, to protect a party’s interest in a property, before a formal family law settlement is reached, it may be appropriate to change ownership from joint to tenants in common in equal shares. This process is referred to as “severing a joint tenancy”.
Severing a tenancy ensures that a 50 per cent share in the property is preserved for each owner until a final Family Law Order/Binding Agreement is made. If it is appropriate to sever a joint tenancy prior to final Orders being made no stamp duty is payable on the severance, but you will be required to engage a property lawyer or conveyancer to effect the transaction. It is a requirement that notice is given to all owners prior to severing the tenancy.
You should seek experienced family law advice prior to dealing with property in any way following separation. To discuss your property settlement contact one of our experienced family lawyers on 07 5609 4933.
Please note the above family law information relates specifically to the circumstances of separated parties and is not to be taken as legal, financial, taxation or succession advice.