A recent High Court decision of Mr Justin Allen on 14 January 2020 in the matter of A.D.M Mersey Plc v Bergin and Another provides clarity on the effect of a voluntary severance of a joint tenancy where a judgment mortgage has been registered against the interest of one party only. The judgment held that a joint tenancy may be severed despite the registration of a judgment mortgage against one of the parties. The party against whom no judgment has been registered may deal with the property in such a manner as to remove it from the reach of the judgment creditor.
Treatment of Joint Tenancy or Tenancy in Common on death
Property held by two or more parties is usually held either as joint tenants or as tenants in common. On the death of one or more of the parties how the property is dealt with is dependent on how the property was held. The right of survivorship is a distinguishing feature.
If property is held as joint tenants and one of the parties dies, the remaining parties automatically become entitled to the deceased’s interest in the property and their interest in the property increases. A joint tenant cannot make a will purporting to leave their share in the land to someone other than their co-joint tenants. This differs from where a property is held by the parties as tenants in common as there is no right of survivorship. The death of one of the parties does not result in an increase in the interest of the remaining parties. Where a tenant in common dies his/her interest passes under his/her will or on intestacy.
A joint tenancy can be severed by written agreement with the other joint tenants.
A father and son were registered owners as joint tenants of land in County Kilkenny. In 2010 a judgment was obtained by the plaintiff (then known as A.D.M Londis) against the son and his wife and registered as a burden on the property against the interest of the son. In April 2013 the father executed a codicil to his will, by which he bequeathed his interest in the property to two grandchildren. In May 2013 the father and son executed a transfer to sever their joint tenancy and to transfer the land to themselves as tenants in common in equal shares. It was acknowledged that the object of the transfer was to protect the father’s interest in the land from his son’s creditors. Mr. Justice Allen stated that he could see “nothing whatsoever wrong” with the father seeking to put his interest beyond the reach of the plaintiff.
When the father died in August 2018 his interest in the lands were passed to the two grandchildren.
When the matter came before the Court in March 2019 the plaintiff’s position was that whatever might have been done following the registration of judgment mortgage was not relevant. The issue which arose was whether joint tenants of registered land can sever their joint tenancy after the registration of a judgment mortgage, in a manner which is effective against the judgment mortgagee.
The judge concluded:
- the judgment mortgage registered in 2010 against the son’s interest in the land did not affect the interest of the father, who at the time was a joint tenant.
- the judgment mortgage did not attach to the lands but rather only an interest in the lands – this interest was the son’s undivided share as joint tenant with his father.
- the judgment mortgage did not sever the joint tenancy, but neither did it affect the right of the father to sever the joint tenancy or the right of the son to consent to such severance. Nor, since it took effect as a charge, did the judgment mortgage affect the son’s ability to deal with his interest.
- the 2013 deed was effective in severing the joint tenancy.
- the effect of severing a joint tenancy, in land and in equity, is not to convey or transfer the interest, or any part of the interest, of either co-owner to the other, but to convert the undivided share of each joint tenancy into an undivided moiety in the land.
Before severance of the joint tenancy, the plaintiff’s judgment was attached to the undivided share of the son. After severance of the joint tenancy, the judgment mortgage attached to the son’s undivided moiety, and it is to be satisfied out of that interest.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.