Joint Ownership of Real Property: Potential Issues
When two or more individuals purchase real property together, such as a house, a cottage, or even vacant land, the way in which they take title to the property is often a very small, uninteresting detail in the context of the entire transaction. However, it can have major implications which may or may not be intended.
There are two ways in which people can take title to real property where there are two or more owners: either as tenants in common or as joint tenants. The main distinguishing feature is what is referred to as the “right of survivorship”. While a right of survivorship exists for joint tenants, it does not apply to tenants in common. A right of survivorship means that, should one of the joint owners predecease the other(s), their interest in the property would automatically vest in the other owner(s). On the other hand, if property is owned by two or more individuals as tenants in common, there is no right of survivorship; therefore, if one owner predeceases the other(s), their interest will not vest automatically in the other owner(s), but rather, it will form part of their estate and will be dealt with in accordance with their will or the laws of intestacy in the event that there is no will.
The right of survivorship could create a real concern for someone who, after separation, may no longer wish for their ownership interest to vest in the other property owner(s) should something tragic occur. Some individuals mistakenly operate under the assumption that, since they have a valid will, their interest in the property will automatically form part of their estate and be dealt with pursuant to the terms set out in their will. The answer to this question, as indicated, depends on how title to their property is held. In some cases, this automatic vesting through the right of survivorship is undesirable; however, in others, it may be used as a helpful estate planning tool, given that any property which is owned by the deceased as a joint tenant will fall outside of their estate and will not require probate (which reduces exposure to estate administration tax).
If a joint tenant wishes to become a tenant in common and therefore circumvent the right of survivorship, it is possible to do so. A joint tenancy can be severed in a number of ways, one of which being the simple registration of a transfer on title to the property. This is relatively inexpensive and can be done without notifying the other joint owner(s), and without their consent. Nevertheless, a joint tenancy may also be severed by “any course of dealing sufficient to intimate that the interests of all were mutually treated as constituting a tenancy in common”, which means that sometimes, the joint tenancy is severed inadvertently due to actions taken by the owner(s) (see In the Estate of Tracey Irene Juneau, 2023 ONSC 3524). For example, a post-separation agreement between separated spouses (married or common-law) regarding the sale and division of proceeds of jointly owned property may be deemed by a court to be sufficient to sever the joint tenancy.
Please note that there are exceptions to these general principles and arguments for a resulting or constructive trust could be made depending on the fact scenario, even when a party is not on title to the property. It is important to obtain legal advice regarding your particular situation.
All of the above is provided for information purposes only and is not to be considered legal advice. Please ensure that you consult a lawyer in regard to your particular circumstances.
Giggey & Despatie LLP | 613-936-1800
alexis@giggeydespatielaw.ca | www.giggeydespatielaw.ca
