When you are purchasing a property with someone else, you will be asked how you wish to take “title” to the property. Title is also commonly known as the ownership of a property. You will have the following choice to make – will you take title as joint tenants or tenants in common.
The main difference between taking title as joint tenants and as tenants in common lies in what happens upon the death of a property owner. When one joint tenant dies, that owner’s interest passes to the surviving joint tenant(s) (subject to rights under the Family Law Act) by right of survivorship. Whoever is the last joint tenant to die owns the property outright and only that last person can use their Will to give the property to someone else.
For example, Alex and Andrew have purchased a home and took title as joint tenants. If either owner were to pass away, title would pass directly to the surviving owner by the right of survivorship. The surviving owner would need to register a survivorship application to reflect the death of the deceased joint owner on title. On the death of a joint owner, the property is not subject to the estate administration process, commonly referred to as “probate” and as a result, no probate fees are payable on the value of the deceased owner’s interest.
This is not the result if title is taken as tenants in common. In this situation, in the event that an owner passes away, that owner’s interest in the property becomes part of their estate and disposition of that owner’s share will be governed by their Will. If there is no Will, the government has rules that decides. Unlike holding title as joint tenants, where all joint tenants must have an equal interest, if title is held as tenants in common, different percentage ownership interests could be specified, such as a 99% and 1% ownership structure.
As an example, let’s say Alex, Andrew and Chris own a property as tenants in common each owning 1/3 of the home. If Alex passes away and in her will she leaves her share to her spouse, Deana, then the owners would then be Deana, Andrew and Chris. Then, if Andrew passes away and leaves his shares to his spouse, Whitney, the owners would then be Deana, Whitney and Chris. As tenants in common, each of the individual owners retain control of their share, an important point to consider. The difficulty is that it is hard, if not impossible, to sell a part interest in a property, so having an agreement among the owners dealing with rights and obligations to buy each other out in various circumstances should be arranged.
It is recommended that you obtain legal advice on the best option for taking title to your property taking your own circumstances into account.
This blog post was written by Diana Tebby, a member of the Real Estate and Wills and Estates teams. She can be reached at 613-369-0384 or at diana.tebby@mannlawyers.com.
