Difficulties can arise where joint tenants hold an agricultural tenancy and one of the joint tenants dies.
A joint tenancy means that each of the tenants holds a separate interest as a tenant in the lease. It is common for a tenancy to be held jointly by different family members, for example by a parent and child. There are some important consequences of a joint tenancy of which people should be aware.
Generally speaking, a written lease will provide for one of two ways in which a joint tenancy can be held in the event of the death of a joint tenant. It can be held by the joint tenants and to the survivor of them, or it can simply be held by the joint tenants equally between them without any mention of a survivor.
If it is held jointly and to the survivor, this means that on the death of the first joint tenant, their interest as joint tenant passes automatically to the survivor without any legal proceedings having to be carried out. The survivor becomes the sole tenant in their own right under the same lease.
However, if the tenants hold a joint tenancy without a survivorship destination, steps have to be taken on the death of one of the joint tenants to transfer that interest after death.
In most cases, the deceased joint tenant’s executors will have a year within which to carry out the necessary legal procedures to transfer the interest. Failure to do so will lead to catastrophic consequences and the tenancy will come to an end after the first anniversary of the death.
There are a number of instances where this step has not been followed and secure agricultural tenancies have been lost.
Joint tenants who are unsure of the precise nature of their joint tenancy and whether it will pass automatically to the survivor should seek advice so that appropriate provisions are made in their wills to take account of the joint interest after death.
For more information, please contact Hamish Lean or your usual Shepherd and Wedderburn contact.
A version of this article first appeared in The Press and Journal (Inverness, Highlands & Islands)