Our previous post on co-ownership introduced the concept and the benefits and pitfalls of owning property with others. As you know there are a several ways in which co-ownership of a property can be extinguished, but this depends on the form in which the co-ownership takes; i.e. do you own the property as, tenants in common, or as joint tenants.
We have previously examined severing co-ownership where the property is held as joint tenants and will now cover in more detail severing the co-ownership where it is held as tenants in common.
Termination of Tenancy in Common:
Many instances of severing a joint tenancy will not result in the co-ownership of the property ceasing, but rather its conversion to a tenancy in common. For co-ownership to cease this tenancy in common must then be terminated. To bring the co-ownership of the property to an end the tenancy in common must be terminated.
The most straightforward way for this to occur is by agreement. There are several ways in which this can occur. The first is by dividing the shared property into portions and allocating them amongst themselves. These portions can then be sold independently by each tenant. If the property cannot be divided then the tenants can elect to sell it as a whole and divide the proceeds accordingly, or alternatively one tenant can purchase the shares of the other tenants, thus becoming the sole interest holder.
If an agreement between tenants cannot be reached though then section 41 of the Property Law Act will apply, in which a co-owner can apply to the court for an order that the property in question be sold and the proceeds shared amongst the tenants in common, or that the property be divided and distributed amongst the tenants. The court has discretion as to whether grant such an order.
Overall severing the co-ownership of a property held as tenants in common is a simple process as each co-owner holds a separate and distinct interest in the property, which they can dispose of in any way they please in most circumstances. Where owners disagree the court can intervene and order the property be sold it the profits distributed amongst the owners, therefore severing the co-ownership.