severance of joint tenancy

One of the first things any new property lawyer is tasked to do is advise clients of the difference between holding property on a joint tenancy as opposed to a tenancy in common. Further, it is a daily occurrence in practise, not just for property lawyers but private client lawyers and others advising people about their property and possessions, removing the rule of survivorship and ensuring that the property interests are held separately and fall within the personal estate of each joint owner upon the death of one or more.  

What is the difference between a joint tenant and a tenant in common?

It is well known that a joint tenant doesn’t own a specific share in the Property but that they share the whole in common with the other joint tenant(s). In contrast, a tenant in common may own a specific proportion, e.g. a certain percentage, and it is common in business relationships or upon the breakdown of any kind of relationship between co-owners to ensure that they protect their interest in the asset concerned and to do away with the rule of survivorship i.e. that the deceased joint tenant’s share passes to the other joint tenant(s).  

What is severance?

Severance is the way in which a joint tenancy may be converted into a tenancy in common. It can essentially be severed by one of the joint tenants acting on their notional share, by mutual agreement or by mutual conduct. As such, the only way in which it can be dealt with unilaterally is for a joint tenant to act upon their notional share. Certain acts, such as bankruptcy, or the imposition of a charging order against that joint tenant can operate to sever the joint tenancy.  

Previously, in the case of registered land, it was considered sufficient for a joint tenant to apply to the Land Registry to register a restriction in Form A, requiring that the sole survivor could not transfer the legal estate of the property unless a trust corporation. The effect of this is to ensure the survivor of the joint owners respects the shares due to the joint tenants and the trust of land that arises by joint ownership. However, the recent High Court case of Fantini v. Scrutton & Others [2020] EWHC 1552 (Ch) has cast doubt on the effectiveness of this process.  

The High Court case of Fantini v. Scrutton & Others

In Fantini, there was a sad background. A property was owned jointly by mother and daughter. The daughter was terminally ill and, on advice from her lawyers, served a notice of severance on her mother to bring the joint tenancy with her to an end. This notice was sent by recorded delivery to her mother. An application was then made to HM Land Registry, filing Form SEV to request a From A restriction and notify the Land Registry of a severance of the joint tenancy. HM Land Registry duly notified the mother of the application and processed it in the ordinary way. The daughter sadly died. Even worse, the mother died not that long afterwards.

The recorded delivery letter was returned in the post undelivered. Under Section 196 Law of Property Act 1925, this did not amount to sufficient service and therefore it was deemed that the notice of severance had not been served upon the mother. Relying instead upon the application to HM Land Registry, the lawyers for the daughter’s estate sought to rely upon that as notification of the severance of joint tenancy by their application. However, the Court determined that this in itself was insufficient to amount to a severance of the joint tenancy.  

Mr Justice Shuman relied upon Section 36(2) Law of Property Act 1925 which requires, among other things, that the joint tenant shall give to the other joint tenant(s) a notice in writing of their desire or do such other act or things as would sever the tenancy in equity. Further, given that the notice of severance had been returned undelivered, Section 196(4) Law of Property Act 1925, and the decision in WX Investments v. Begg [2002] 1 WLR 2849 provided that this was insufficient service. The Judge was not satisfied that the notice had been properly served or communicated to the mother.

In relation to the backup of the notice from HM Land Registry, which was sent to the mother indicating that such an application had been made, and which had been received by her, the Judge was not satisfied that it was sufficiently clear to communicate that there had been a severance of the joint tenancy.  It indicated that a restriction had been placed. However, he was not satisfied that it could constitute a notice of severance. Accordingly, it was deemed that there had been no notice of severance served and therefore the rule of survivorship applied and the mother was entitled to 100% of the value of the property concerned.  

The importance of serving notice

Despite the other examples I gave at the beginning of this note where severance happens and there is a possibility that no real notice may be given to the other party, e.g. bankruptcy, care will now need to be taken to ensure that a suitable notice of severance has actually been brought to the attention of the other joint tenant(s). This is yet another example of why personal service is always the best option for notices with the onus clearly being upon the person serving the notice to show that it has been served and brought to the attention of the recipient(s).  

Further, a review of any steps taken in a similar fashion to this case where comfort had been taken by virtue of the fact that HM Land Registry had placed a Form A restriction and sent notification of the same to the other joint tenant(s), may well need review. The service of fresh notices of severance may be deemed prudent if there is any question of doubt. Of course, things may have moved on in the meantime and it depends upon when such steps were taken.  

Certainly going forwards, care will need to be taken to ensure that notice of severance is properly served bearing in mind the previous practice relied upon as a backup by some may now be deemed insufficient.