Does Divorce Sever A Joint Tenancy in Australia?

Divorce does not automatically sever a joint tenancy arrangement regarding property ownership. 

When a couple divorces, the joint tenancy remains in effect until it is legally severed. One party needs to take specific legal action to sever the joint tenancy and convert it into a tenancy in common (where each owner has a distinct share that can be bequeathed to someone else upon death). 

This typically involves serving a written notice of the intention to sever the joint tenancy on the other party and registering this notice with the relevant state or territory land titles office.

What is joint tenancy?

Joint tenancy is a legal arrangement where two or more people (called joint tenants) hold equal ownership rights over an asset. This asset is typically real estate, but can also apply to bank accounts, vehicles, or other property.

Key Features

• Equal Ownership: Each joint tenant owns the whole property, not a specific portion.
• Right of Survivorship: The defining feature of joint tenancy in Australia. If one joint tenant dies, their interest in the property automatically passes to the surviving joint tenants. This overrides any will provisions.
• The Four Unities: Just like other jurisdictions, these requirements are essential for a valid joint tenancy in Australia:
  • Unity of Possession: Each joint tenant has the right to possess the whole property.
  • Unity of Interest: Each joint tenant holds an equal share in the property.
  • Unity of Title: Joint tenants must acquire their interest through the same legal document and method.
  • Unity of Time: Joint tenants must acquire their ownership interest at the same time.

Example:

If a married couple buys a house under joint tenancy in Australia, they both have full ownership.  If one spouse dies, the surviving spouse becomes the sole owner without the property passing through the estate.

How Joint Tenancy Can Be Severed in Australia

Severing a joint tenancy means converting the joint tenancy into a tenancy in common, where each party owns a specified share of the property independently.

This action is significant because it eliminates the right of survivorship associated with joint tenancy, allowing each tenant to bequeath their share of the property in their will.

Here’s how joint tenancy can be severed in Australia:

1. Unilateral Action by One Joint Tenant: A joint tenant may decide to sever the joint tenancy without the consent of the others. This is typically done by executing a document that declares the intention to sever the joint tenancy. The joint tenant must then register this document with the appropriate land titles office in their state or territory.
2. Mutual Agreement: All joint tenants can agree to sever the joint tenancy and enter into a tenancy in common. This agreement should be in writing, signed by all parties, and properly registered to be legally effective.
3. Sale of Property: Selling the property can also sever the joint tenancy. Upon sale, the joint tenancy is dissolved, and the proceeds are distributed according to the joint tenants’ ownership shares.
4. Partition: The joint tenants or one of them can apply to a court for an order to partition the property. This can result in the physical division of the property (if feasible) or a forced sale and division of proceeds.
5. Bankruptcy: If one joint tenant becomes bankrupt, their interest in the property is typically transferred to a trustee in bankruptcy, severing the joint tenancy.
6. Court Order: In certain circumstances, such as a relationship breakdown, a court can order the severance of a joint tenancy as part of a property settlement.

The specific process and requirements for severing a joint tenancy can vary between different Australian states and territories, so it is essential to consult with a family law expert or the relevant land titles office in your jurisdiction to understand the applicable laws and procedures.

Important Considerations for Australians

• Severance in Divorce: In Australia, divorce does NOT automatically sever a joint tenancy. You must take explicit steps to sever it to protect your interests.
• Estate Planning: If your will contradicts a joint tenancy arrangement, the right of survivorship will prevail under Australian law. Update your will accordingly to avoid unintended consequences.
• Capital Gains Tax: Severing a joint tenancy can trigger capital gains tax implications. Consult a tax advisor.

Severing a Joint Tenancy

Our client approached Walker Pender seeking assistance in severing a joint tenancy on a property he owned with his ex-wife. They were already divorced, and he had begun a new relationship. His goal was to protect his future family’s interests in the property.

Here’s how we achieved a favorable outcome:

1. Understanding the Facts: We gathered essential information, including when the property was purchased, how the title was held, and any prior agreements.
2. Unilateral Severance: We explained the option of unilateral severance to our client. As divorce itself doesn’t sever joint tenancy in Australia, this was the most straightforward path.
3. Execution: We prepared the formal notice of severance on our client’s behalf and arranged for it to be served to his ex-wife.
4. Effect of Severance: Once served, the joint tenancy is converted into a tenancy in common. This meant our client and his ex-wife now owned distinct shares of the property, which he could leave to his new family in his will.

With the legal process completed, our client successfully protected his future and secured the property interests of his new family.

Does Divorce Sever a Joint Tenancy? 

Going through a divorce and worried about your property rights? Don’t let uncertainty dictate your future. Discover how divorce impacts joint tenancy and safeguard your interests with Walker Pender’s expert guidance.

Whether you’re contemplating severance or seeking to understand your legal position, we’re here to help you navigate the complexities. Secure your peace of mind today—partner with Walker Pender for clarity and confidence in your property matters.