In Australia, most married couples typically own property such as real estate as joint tenants in equal shares.
So, how does joint tenancy work during a divorce?
When a couple decides to end their marriage in Australia, the usual practice is to consult legal experts and come to an agreement about splitting up the property and assets acquired during the marriage.
This also includes superannuation.
With real estate, joint tenancy means that each person owns an equal share and interest in the property and should one party die, the title to the property passes solely to the surviving member of the partnership.
This is called a right of survivorship.
So even if the deceased person intended to will their property to another party, the right of survivorship trumps this, and the surviving partner will be deemed the sole owner of the real property.
The Impacts of Divorce on Joint Tenancy Arrangements
The dissolution of marriage poses several questions concerning jointly owned properties.
#1) Does Divorce Automatically Sever Joint Tenancy?
While the emotional severance might be apparent, legally, a divorce doesn’t automatically sever a joint tenancy.
The property remains under the umbrella of joint tenancy with the right of survivorship unless action is taken to alter the title.
#2) Can One Spouse Sever a Joint Tenancy Without the Other’s Consent?
In Australia, it’s possible for one spouse to unilaterally sever a joint tenancy through a process known as ‘unilateral severance.’
This involves serving the other joint tenant with a notice of their intent to sever, thus converting their interest to ‘tenants in common’. However, consulting with a family law expert or property lawyer is advisable for guidance.
#3) What Happens to Jointly Owned Property After Divorce?
Selling a property held as joint tenants during a divorce can be complex.
Both parties must reach an agreement on the sale and the distribution of proceeds. Lawyers are often involved to ensure this process goes smoothly.
#4) Can I Protect My Interest in a Joint Tenancy During Divorce Proceedings?
Absolutely. Initiating dialogue early, seeking mediation, and establishing written agreements on property intentions can safeguard interests.
Also, referencing a divorce financial checklist ensures all financial bases are covered.
#5) Are There Tax Implications When Severing a Joint Tenancy Due to Divorce?
Yes, there can be capital gains tax implications when changing property ownership types or selling the property.
It’s essential to understand potential tax obligations.
Converting Joint Tenancy to Tenants in Common Post-Divorce
In the aftermath of a divorce, it’s not uncommon for individuals to reassess property ownership structures, especially when both parties wish to retain some form of ownership or stake in the property.
Often, a property will be sold, or transferred into one party’s name as a result of the property settlement.
One viable option is converting from a joint tenancy arrangement to a tenancy in common. Here’s a deeper dive into what this conversion entails:
Understanding the Difference
Joint tenancy is a form of co-ownership where all owners have equal rights to the property. It operates on the principle of the right of survivorship, which means if one owner passes away, their share in the property automatically transfers to the surviving co-owner(s). Post-divorce, this can be a point of contention, especially if one party wishes their estate to inherit their share.
On the other hand, tenancy in common is more flexible, allowing co-owners to possess shares in the property that aren’t necessarily equal. There is no right of survivorship; thus, each party can bequeath their share of the property as they see fit in their will.
Why Consider the Conversion?
Several reasons might drive this decision:
- To reflect an updated agreement on each party’s share in the property.
- To facilitate estate planning, allowing each individual to pass on their share of the property to their chosen beneficiaries.
- To prevent potential future disputes by clearly defining ownership percentages.
Steps to Make the Conversion:
- Serving a Notice of Severance: The first step involves one party serving a notice of their intention to sever the joint tenancy to the other joint tenant(s). This is a legal declaration of their intent to change the nature of their ownership. The notice must be clear, unequivocal, and adhere to any statutory requirements.
- Lodging Documentation with the Land Titles Office: After serving the notice, it’s crucial to lodge the appropriate documentation with the Land Titles Office (or the equivalent in the relevant Australian state or territory). This ensures that the property’s title is officially changed to reflect the new ownership structure.
- Seeking Legal Advice: Due to the complexities and potential ramifications of altering property ownership types, consulting with a family law expert or property lawyer is imperative. They can guide you through the process, ensure you’ve followed all necessary legal procedures, and help safeguard your interests.
While converting joint tenancy to tenants in common post-divorce can seem daunting, it provides an avenue for co-owners to clearly define and protect their individual interests in a jointly-owned property.
With the right guidance and understanding, it can be a strategic step towards securing one’s financial future after a marital separation.
The Crucial Role of Family Lawyers in Joint Tenancy Divorce Issues
When it comes to complex issues like joint tenancy agreement relationship breakdown, transfer of joint tenancy to sole ownership, or even understanding how to transfer joint tenancy property after death, it’s prudent to consult an expert.
A family lawyer offers valuable insights, ensuring your rights are upheld and guiding you through processes such as challenging a joint tenancy (if you ponder, “Can joint tenancy be contested?”) or managing a house in a joint name divorce scenario.
For comprehensive information on Australian family law, particularly around property matters, it’s worth exploring the Family Court of Australia and Federal Circuit Court of Australia’s overview.
What is Joint Tenancy?
Joint tenancy is a form of property ownership where two or more individuals own a property together, each with an undivided interest.
The hallmark feature of this arrangement is the right of survivorship.
This means that upon the death of one joint tenant, their share automatically passes on to the surviving joint tenant(s), irrespective of any will provisions.
Facing Questions on Joint Tenancy and Divorce?
Let Justice Family Lawyers guide you through this complex property and marital law intersection. Our dedicated team provides clear, personalised advice tailored to protect your interests. Reach out to Justice Family Lawyers today and ensure your property rights are in expert hands.
Principal of Justice Family Lawyers, Hayder specialises in complex parenting and property family law matters. He is based in Sydney and holds a Bachelor of Law and Bachelor of Communications from UTS.