How the law defines ‘joint tenancy’ and ‘tenants in common’ will have a huge bearing on what happens to any property or land you jointly own with another individual upon your death.
As we’ve previously discussed in this blog, the difference between the two types of ownership, and what they might mean for the people involved. But how can you best mitigate any potentially tricky situations arising because the ownership status has not been given the due care and attention it deserves?
Here we look at a specific case in which what might deemed a minor oversight when severing a joint tenancy to better reflect the wishes contained in their Wills, had major repercussions on what happened to the properties involved upon one owner’s death.
The case of Lee v Lee
In 2002, Mr and Mrs Lee purchased an area of farmland as beneficial joint tenants. The farm consisted of a bungalow, which was to be the couple’s home, along with a number of surrounding outfields registered under three unique title numbers, although the third title number was not created until 2008.
In 2007, Mr and Mrs Lee made Wills which expressly outlined that on the death of the first spouse, the survivor would become the sole owner of the bungalow and three named fields, whilst also retaining a half share in the remainder of the farm, with the other half being left to their son. On the death of the second spouse, their son would receive the remaining half, plus the bungalow and the three fields. To achieve this, a notice of severance of the joint tenancy in the land was prepared and signed. However, in a somewhat costly mistake, the severance only made reference to one of the three title numbers.
The couple revised their Wills in 2011 but retained similar provisions to those contained in the 2007 Wills. Their son was entitled to the half share left by the first parent to die, excluding the bungalow and the three fields. The residuary estate would go to the surviving spouse. However, no change was made regarding the severance of joint tenancy.
When Mr Lee died in 2014, because the notice of severance only referred to one of the three titles, the bungalow and land in the remaining titles all passed to Mrs Lee by survivorship rather than by Will. This meant that their son received only Mr Lee’s half share of the initial title – far less than had initially been intended.
Had the notice referred to all three titles, the bungalow and three fields would have passed to Mrs Lee under the gift of residue in the Will, and the son would have received Mr Lee’s half share in the remainder of the farm as a specific gift to him.
In 2015, attempts were made to rectify the position by entering into a Deed of Variation to Mr Lee’s estate which attempted to transfer Mr Lee’s half share in the three fields to his son. However, this failed as the land had automatically passed to Mrs Lee and, therefore, was outside Mr Lee’s estate.
The failed gift came to light during the administration of Mr Lee’s estate, at which point Mrs Lee applied to the Court for an order rectifying the 2007 Notice of Severance to include all the parcels of land.
The Court referred to the necessary conditions for rectification when assessing their verdict:
- There must be convincing proof to counteract the evidence of a different intention represented by a written document. This was evidenced in a letter recording their instructions, which was confirmed by their solicitor. They believed the notice would sever the joint tenancy in the whole farm when, in fact, it only covered a part of it.
- The written document must be flawed so it does not give effect to the parties’ intention, as opposed to the parties merely being mistaken about their intention. The notice did not give effect to the agreement between, and intention of, Mr and Mrs Lee as it only severed the joint tenancies in part.
- The specific intention of the parties must be shown. It is not sufficient to show that the parties did not intend what was recorded. They clearly wished to sever the joint tenancies with regards to the whole farm, because that was the method by which they could each leave a half share of the entire property to their son.
- There must be an issue capable of being contested between the parties although all relevant parties consent. In this case, if rectification was awarded, their son would take a half share in the entire farm, apart from the farm bungalow and the three named fields. If not, he would only take a half share in the one title that was included under the notice of severance. That is plainly “an issue capable of being contested between the parties.”
In the end, the Court found that all conditions were met and made an order to rectify the notice. But that doesn’t take away the additional stress and costs incurred by the already grieving Lee family.
All of this highlights the importance of not taking things for granted when it comes to property ownership and provisions left within Wills.
In preparing the 2011 Wills, the solicitor made the incorrect assumption that the joint tenancies in all the land which constituted the farm had been severed. By simply reviewing the notice of severance and checking the three registered titles, at minimal cost, this would have been revealed.
The resolution of the conveyancing mix-up involved a transfer of land to Mr and Mrs Lee. Before registering this, the question of whether the land was to be held as ‘joint tenants’ or ‘tenants in common’ was never asked, with serious implications. Therefore, in any property transactions, it is important that individuals liaise with their Will draftsperson and conveyancer to ensure their deeds follow the intentions established in their Will.
Engaging a qualified legal professional with specific expertise in such matters will always be the most prudent way to ensure that all protocols are followed and facts are checked, and this should bring any mistakes or anomalies to light before it’s too late.
Should you have any queries regarding property ownership and the transfer of such within a Will, please call the specialist team at Buckles for an impartial consultation.
