By: John Millar

In your practice of Real Estate Law, a client may contact you to advise they wish to sever a joint tenancy of their property - possibly due to family law issues or estate planning issues. When a joint tenancy is severed, the property ownership will become - tenants in common - for all owners.

As you are probably aware, joint tenancy means that, upon the death a joint owner, the property automatically transfers to the surviving owner or owners. Upon the death of a tenant in common, that person’s share of the property forms part of his or her estate and does not pass to the surviving owner or owners.

Joint tenants can sever a joint tenancy by conveying the property from one of the joint owners to themselves, example:

Harry and Sally own a property in Hamilton, as joint tenants. Harry can convey the property to himself, and this will sever the joint tenancy. If you have never represented Harry or Sally before, you could assist Harry with this transaction. The problem occurs if you represented Harry and Sally regarding the original purchase of the property. Without discussing all the components of a joint retainer or even conflict of interest, you should not complete this request by Harry yourself, without notifying Sally. Obviously, it is easier to simply advise Harry you cannot complete this transaction without Sally’s consent, so that Harry can use another lawyer for this transaction

Years ago, the Law Society provided an example where a solicitor incorrectly tried to sever a joint tenancy by completing a conveyance to a Third Party. The problem is that severing a joint tenancy by conveyancing a property from Harry to Harry is NOT a disposition of property. However, a conveyance to a Third Party is a disposition of property. As the Law Society pointed out the difference between the two become a negligence claim against a lawyer.

The example was:

The female client was terminally ill with cancer. She and her husband owned the matrimonial home as joint tenants. She had a good relationship with both her husband and her daughter.

Unfortunately, the husband and daughter did not get along with each other.

The client feared that after her death, her husband would disown the daughter. The wife came to the solicitor for advice as to how she could ensure that her half of the house would belong to the daughter.

The solicitor explained that her husband’s consent would have to be obtained in order for her to transfer her interest in the matrimonial home. The wife did not want to approach her husband for his consent. The lawyer then drafted a Deed without spousal consent transferring the interest of the mother to the mother and daughter jointly. After the wife’s death, the father and daughter had a falling out. The father brought an application to have the conveyance set aside on the grounds that the property was the matrimonial home and could not be conveyed without his consent. He was successful.

The daughter claimed against the solicitor for one half of the value of the house. The Insurers settled the matter.

In summary, when severing a Joint Tenancy, be careful as to how you complete this and mindful of the implications of the Joint Retainer Rule and Conflict of Interest.