Imagine purchasing your dream property with a loved one, only to face irreconcilable differences years later. While co-ownership begins as a partnership of trust, it can quickly become complicated when relationships change or financial priorities diverge. In Hong Kong, such arrangements typically take one of two forms – joint tenancy or tenancy in common – each with distinct implications for ownership rights and succession. Understanding these structures from the outset could mean the difference between an amicable solution and a costly legal battle when co-owners need to part ways.
In Hong Kong, property ownership may be held either solely or through co-ownership, with the latter comprising two principal types:
(i) Tenancy in common – Each co-owner holds a defined, transferable share (e.g., 30%, 50%) in the property while sharing possession of the whole. These shares form part of the owner’s estate upon death, passing to beneficiaries through wills or intestacy rules.
(ii) Joint tenancy – Co-owners collectively hold the entire property without individual shares, governed by the right of survivorship. When one joint tenant dies, their interest automatically transfers to the surviving owner(s), bypassing estate distribution.
Problems with Joint Tenancy
For some (e.g. married couple or close family members), holding a property as joint tenants may be acceptable, but for others (e.g. business partners or estranged co-owners), it may prevent them or their families from liquidating the property’s capital value. To address this, any joint tenant may “sever” the joint tenancy, and convert it into tenancy in common.
Severance
Severance occurs when a joint tenancy is converted into a tenancy in common. Any act that destroys one or more of the four unities (possession, time, title and interest) will result in severance.
Timing of Severance
Severance must occur during the joint tenants’ lifetime. A joint tenancy cannot be severed by will but where the joint tenants concurrently execute mutual wills leaving their respective shares to the survivor for life with the remainder to a designated third party, the mutual wills can amount to a severance if they demonstrate a clear and unequivocal intention to treat the property as separate shares – an evidence of an agreement or conduct that implies severance.
Methods of Severance
I. Severance at Law
Under Section 8(1) of the Conveyancing and Property Ordinance (Cap. 219) (“CPO”), a joint tenancy of an estate or interest in land may be served at law only by:
(a) a notice served by a joint tenant on the other joint tenants; or
(b) an instrument.
(a) By Notice
Severance by notice is the most common method and does not require the other joint tenant’s consent (Chang King To v Cheung & Choy [2015] 5 HKC 411).
A valid notice must meet the following requirements (though no specific form is required):
- Must be in writing (Section 62(1) of the CPO);
- Must be properly served – either personally delivered or sent to the last known place of abode or business (Sections 62(3) and (4) of the CPO). The notice remains effective even if not received (Re 88 Berkeley Road, NW9 [1971] Ch 648) or destroyed before being read (Kinch v Bullard [1998] 4 All ER 650);
- Must express “an immediate intention to server”- not merely a desire that a tenancy should be severed in the future (Harris v Goddard [1983] 3 All Er 242);
- Must be served by the joint tenant – a personal representative cannot serve a notice of severance unless he has been duly assented the property as a beneficiary (Chung Wing On v Chung Wing Pui [2006] 3 HKC 546 (CFI));
- No strict signature requirement – though signing is the best practice for authenticity.
(b) By Instrument
An instrument (defined in Section 2 of the CPO as “any document having legal effect except a will”) may also sever a joint tenancy. Examples include:
– A written agreement to sever.
– A sale, mortgage, or other disposal of a joint tenant’s interest.
Registration Requirement: The notice or instrument must be registered in the Land Registry to bind subsequent purchasers or mortgagees (Section 3(2) of the Land Registration Ordinance (Cap. 128)).
II. Severance in Equity
A joint tenancy of an estate or interest in land under Section 8(2) of the CPO may be severed in equity by:
(a) notice served by a joint tenant on the other joint tenants, or
(b) any method which is effective in equity or which, but for the provisions of Section8(1) of the CPO, would be effective at law, including:
(i) An Act Operating on a joint tenant’s share
This method is usually unilateral and requires an act with final or irrevocable character which effectively estops the serving joint tenant from claiming the benefit of survivorship in the future. Such an act normally takes the form of alienation of a joint tenant’s share, for example, by way of transfer or assignment, the grant of mortgage by one joint tenant or the bankruptcy of one joint tenant (Re Chow Yuet Lam (A Bankrupt) [2000] 1 HKC 404). However, in Ho Wai Kwan & Anor v Chan Hon Kuen & Anor [2015] 2 HKC 99, the court confirmed that as a charging order on an interest in land did not confer any proprietary right or title in land, it will not automatically sever a joint tenancy.
(ii) Mutual Agreement
This method is flexible and does not require a specific form and need not be in writing. It need not be enforceable under the general law and may be inferred from the surrounding circumstances. The key is that the agreement shows an intention to sever ownership. For example, severance may occur when co-owners agree on the precise distribution of property on the breakdown of relationship.
(iii) Mutual Course of Dealing
Severance may occur if the joint tenants’ conduct is “sufficiently clear” to “indicate that their interests are mutually treated as constituting a tenancy in common” (Wong Annita Shu Ting (Formerly Known As Wong Shu Ting Anita v Yuen Yiu Chung [2022] HKCU 459))
Examples include:
– Execution of mutual wills.
– Physical partition of land (if it excludes co-owners from each other’s portions).
However, a mere convenience-based division (e.g., separate occupancy without legal partition) does not sever a joint tenancy (Greenfields v Greenfields (1979) 38 P& CR 570 at 578).
Where it is intended to sever a joint tenancy, especially where contributions were plainly unequal, the results of severance must be carefully borne in mind. Conversion from joint tenancy into tenancy in common may not have all the consequences that one may anticipate. It is important to consider the difference between the two forms of co-ownership at the time of purchase and the consequences of severance (or not) at the point of relationship breakdown. For tailored advice, please feel free to contact our Property and Conveyancing Team for assistance.
