He has been advised by a leading firm of insolvency practitioners that if he severs the joint tenancy and creates a tenancy in common with his spouse 99%/1% that that would effectively prevent them from charging on his house should he be bankrupted; (he knows that that measure would not be effective for a minimum of 5 years).

His solicitor in drawing up the necessary Deeds of Gift has told him that the lender must be informed and possibly agree to this.

So, since HM Land Registry do not say one way or the other, why does he have to inform his lender of his intended course of action and what difference does it make to them since their first charge would be unaffected.

Paul Shearman, mortgage, protection and general insurance proposition director for Openwork

A: Thanks for a challenging question to start off my contribution to the Broker Board. With 2,500 Openwork advisers across the UK throwing questions at me all of the time, I thought there weren’t too many that the Board would raise that I’d not been asked before. How wrong I was!

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My view would be as follows….

The lenders mortgage over the property will contain restrictions on any changes (or “dealings”) that your client makes to the property and his interest in it. This is because the change could prejudice the effectiveness of the charge that the lender has on it.

This would include the scenario of your client converting from joint tenancy (where both parties are jointly liable), to tenancy in common (where the parties are only liable up to their share).

Most lenders would therefore require to be notified of such a change, and in some cases they will reserve the right to provide consent to the change.

In reality, I’m with you that the change doesn’t impact on the lender’s charge and therefore I cannot see that the lender involved would be overly concerned. They would like to know however, how to deal with – for example any repayments or surplus funds – should they go to the husband and wife jointly or be split by separate shares?

The only other point I’d raise is that based on my understanding, if someone goes bankrupt, the insolvency practitioner appointed has powers to look at previous dealings of the individual to see whether or not they have tried in any way to “hide” assets.

I’d therefore suggest your client raises this with Baker Tilly, to see if this has any impact on the proposals.

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