What does it mean & why is it required? - If a property is registered with the Land Registry then the details of ownership (i.e., who owns the property and how they own such property - sole, joint tenants or as tenants in common) can be found on the title.
If the property is owned solely by one person - they can gift the property as they wish within their Will.
If the property is owned jointly by 2 or more people, and one of the joint owners die, their share will automatically pass to the surviving owner/s regardless of whether they gift their half of the property in their Will to someone other than the co-owner. This is known as ‘passing by survivorship’.
If the property is owned as tenants in common, each person named on the title owns their own beneficial share (usually 50%/50% for two clients but can be split differently with a declaration of trust), which means they can gift their share of the property in their Will however they wish to. Their share of the property can also be placed into trust (e.g., with a Property Protection Trust (PPT)) which is why it is important that the ownership of a property is changed to tenants in common if they are setting up a property trust in their Wills. If the joint tenancy is not severed properly, the trust will fail.
The Severance of Tenancy Restriction - If the property is owned as tenants in common which means the clients own their own respective shares, the following statement will be shown under the proprietorship register B:
RESTRICTION: No disposition by a sole proprietor of the registered estate (except a trust corporation) under which capital money arises is to be registered unless authorised by an order of the court.
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