How to transfer severing joint tenancy in NSW

One of the first major decisions a newly married or de facto couple may make together relates to the buying of real estate property. Investing in a property together and lodging their ownership as joint tenants is a big milestone in their relationship.

However, some couples may not adequately consider or have regard to the possibility of changes in their future financial and marital circumstances or status before lodging their joint ownership. If parties hold a property under joint ownership, it’s never too late to transfer that interest to tenants-in-common by the severing joint tenancy in NSW.

Joint tenancy may seem like a sensible arrangement for couples looking to purchase together. However, it can have severe consequences that can impact one’s individual overall asset position. Hence, one must carefully consider both estate, liability and tax planning issues before lodging the ownership of a property as joint tenants to ensure the optimal structure to your own circumstances or intended future circumstances.

What is Joint Tenancy

Joint tenancy is when a property is held equally and jointly by two or more people—the operative word being ‘equal.’ This means that the joint tenants have equal ownership and interest over the property instead of specific or separate shares or rather that they each own the whole property—together.

Joint tenancy is not limited to couples, and there can be more than two owners of a property as joint tenants. For example, siblings may become joint tenants of a property they have inherited from their parents. When this happens, all the siblings are entitled to physical possession of the entire property, but none will hold a defined divisible share.

Moreover, one can hold a property under joint tenancy with different categories of people, e.g., a best friend or business partner.

However, the key point to understand is that a joint tenancy has an automatic right of survivorship. This means if one joint tenant dies, then their interest in the property passes to the surviving owner(s) or joint tenant(s). This happens automatically—without the need for a Grant of Probate in respect to that particular asset. Hence, if an owner in a joint tenancy dies then that share passes to the survivor or surviving joint tenant(s).

What is Severing Joint Tenancy in NSW

Severing joint tenancy happens when you convert your ownership into tenancy in common. After transferring your ownership into tenants in common, you will have control over shares equivalent to the interest you held as a joint tenant. Thus, you can include your shares of the property in your estate and leave it to your beneficiaries. You can also include your shares of the property in a testamentary trust for increased protection.

If there are only two joint tenants, converting your ownership will automatically dissolve the joint tenancy. However, if there are more than two joint tenants, converting your ownership will only change your hold of the property. Hence, the tenancy and shares held by other registered owners of the property will not be affected by the transfer.

A joint tenancy overrides Wills due to the survivorship principle. Regardless of what you have stated in your Will, you cannot leave the jointly owned property to anyone, including your children whilst the joint tenancy is in existence. Thus, it is imperative that you perform a thorough review of your Will and estate planning. Because if your circumstances change, then you might need to lodge a transfer severing joint tenancy in NSW.

Moreover, joint tenants must act like a single owner when dealing with third parties. Therefore, if you are planning to sell your jointly owned property, the other joint tenants must also agree to the sale. Any independent dealings by one joint tenant could also lead to the severing of joint tenancy.

How to Transfer Severing Joint Tenancy in NSW

To initiate the transfer, you must first complete the electronic Transfer Severing Joint Tenancy dealing form and lodge it with NSW LRS. The transferor/transferee must prepare and attach a statutory declaration to the form, stating the following:

‘I am not subject to any legal constraint which would prevent me severing the joint tenancy’.
‘The remaining joint tenant(s) is alive’.
‘I do not hold the estate in a fiduciary capacity’.
the full name of the other joint tenant(s), as shown on the Torrens Title Register, and their residential address—Post Office or DX Box is not acceptable.
the transferor/transferee has sent notification of the severance in writing to every registered mortgagee, chargee and covenant chargee recorded on the folio of the Register.

Once you have completed the form, you may lodge it electronically via an Electronic Lodgment Network (ELN). If NSW LRS is satisfied with the lodged form, they will issue a severance notice to the other joint tenant(s).

The transfer will proceed after 30 days after the date of the notice or receipt of consent from the other joint tenant(s). However, if one of the joint tenants passes away after lodgment, NSW LRS will not proceed with the registration. Instead, they will withdraw the form.

Conclusion

Buying a property for the first time is a very exciting event in a person’s life. Moreover, being able to do it with your spouse or partner makes it even more special. However, feelings and circumstances can change. Hence, if you are planning to purchase a property, it might be best to consider getting legal advice first.

VC Lawyers has Solicitors with extensive experience in Wills preparation and Estate Planning who can thoroughly review your estate planning. We will consider your circumstance and help you determine if you need a transfer severing joint tenancy.

Our qualified eConveyancers can also help you complete and lodge your Transfer Severing Joint Tenancy dealing form in NSW. We also have experienced Property Lawyers to draft and prepare all the required documents to ensure a successful registration.

Talk to us to find out how we can help you transfer severing joint tenancy in NSW.

NB: This blog post is neither a legal advice nor intended to be such, and is only for general information. The same should not also be taken as a financial or commercial advice. The reader must personally consult their professional adviser/s on the contents of this blog post. VC Lawyers is not liable for any loss or damage, direct or consequential, as a result of the reader’s or a third person’s misconstruction of the wordings or use/misuse of the contents of this blog post.