Joint tenancy of a purchased home means you have exactly the same rights to the house as your spouse. Regardless of who paid the deposit and how much of the mortgage you pay, joint tenancy is a legally binding contract that puts you both on level pegging. This means, for example, if one spouse passes away, the other will inherit ownership of the property automatically.
However, if you are divorcing your spouse joint tenancy can become confusing, especially when it comes to inheritance. For this reason, some separating couples may choose to sever their joint tenancy.
Switching to tenancy in common
Deciding to opt for severance of the joint tenancy you have on a property with your ex is legally known as a tenancy in common. It changes the way a property is handled if either of you passes away if you do not wish to sell the home upon separation or divorce.
When a home is owned under joint tenancy both parties have equal rights to the home. Even if neither of you leaves a will, each will inherit the property automatically as the law doesn’t allow you to leave your share of the home to somebody else.
If you move to a tenancy in common you will need to inform the Land Registry. Following the tenancy in common being registered, the property will be divided into equal shares. Whilst you won’t automatically inherit your ex’s share if they were to pass away, you are both free to leave your share of the property to whoever you wish in your will.
Why would you keep a home post-divorce?
Typically, unless children are involved, most couples sell the family home upon divorce. However, some former spouses buy each other out, or simply cohabit until one party is ready to find their own place.
Some other reasons for not selling a marital home include:
- Your property may provide you and your ex with an income
- For example, a livery yard or holiday lets
- The property market may not be favourable
- You both wish to delay any property decisions until the divorce is finalised
Negative aspects of tenancy in common
Naturally, many couples worry about the implications of a tenancy in common if their ex-spouse were to die. Some individuals buy the other party out in the long term, whereas some families with dependent children will choose to remain in a joint tenancy until the children are out of full-time education.
Alternatively, some parents who have divorced name their children as beneficiaries of their tenancy in common. This will ensure that the property stays within the family and avoids tax implications. Some divorced couples who remain amicable can also decide to name their ex-spouse as a beneficiary for the same reason. However, they are welcome to change their mind at a later date.
A fair divorce settlement
Whether your home is owned jointly or you and your ex have opted for tenants in common, it will have no bearing on the financial agreement of your divorce. All assets will be divided in a way that your legal advisers and the court agree is fair.