Severance of Tenancy (Non Mutual)

Non-Mutual Severance of Tenancy is the process by which a party may alter a jointly held property to Tenants in Common without the agreement of the other parties, through the serving a notice. This is only available in England and Wales.

A joint tenancy is a common form of property ownership in which two or more individuals jointly own the property. In a joint tenancy, each owner has an equal share in the property, and when one owner dies, the property automatically passes to the surviving owners. However, joint tenancy may not be the best option for all circumstances, especially in estate planning.

One alternative to joint tenancy is the non-mutual severance of tenancy. This is a legal process that allows joint owners to convert their joint tenancy into a tenancy in common. In a tenancy in common, each owner has a distinct share in the property, and when one owner dies, their share will pass according to their Will, or according to intestacy laws if they do not have a Will. This means that the property will not automatically pass to the surviving owners.

The severance of tenancy can be used as a tool in estate planning to achieve several goals. For example, it may be used to help avoid or minimise the payment of inheritance tax (IHT). If the value of the property is split into shares among the owners, each owner can make use of their own IHT threshold, reducing the overall IHT liability.

Additionally, severance of tenancy can be useful in cases where one owner wishes to leave their share of the property to someone other than the other owners. By severing the tenancy, the owner can ensure that their share passes according to their wishes, rather than automatically passing to the surviving owners.