Property owned by more than one person must be owned in one of two ways, either (a) joint tenancy or (b) tenancy in common.  In practical terms, the chief distinction between joint tenancy and tenancy in common is the right of survivorship. Only a joint tenancy relationship enjoys right of survivorship whereby only the living survivor(s) continue to have legal claim to the property.

 

(a) If you own property with another person as Joint Tenants, then on the death of one joint tenant, his interest in the land passes to the other joint tenants by the right of survivorship (jus accrescendi), and this process continues until there is but one survivor, who then holds the property as sole owner.

(b) Joint Tenancy is a form of ownership whereby each tenant holds a common (or undivided) interest. [See below - Tenants in Common also each own an undivided interest in the asset.]  The right of survivorship exists. If one person dies the other joint tenant(s) automatically inherits the property in equal proportions.  As a result Joint property does not form part of the estate on one’s death. 

(c) All Joint Tenants always own an identical and equal portion of the property and equal rights to the entire property – if there are two tentants, they each own 50%, if there are four, they each own 25%.

(d) “Joint Tenancy” is the same as “Joint Tenancy with Right of Survivorship”

(e) Some people transfer property to Joint Tenancy [or Joint Ownership] in order to avoid probate fees. There can be a number of complications with this approach including:

• Land transfer tax
• Income Tax triggered on the “disposition” of portion of ones interest
• Possible Loss of control of the property
• Potential for claim from creditors of new joint tenant

(f) The law presumes that an asset (other than land) held in two or more names is owned as a joint tenancy, unless there is an indication that the owners own it in shares. So, for example, household goods, vehicles, bank accounts and investments owned by two or more persons will be presumed to be owned by them as joint tenants, unless their respective shares of the assets are specified or there is a statement that the asset is held by the owners as tenants in common.

(g) At the time of purchasing the property, all names of the group who are joint tenants will show up on the title of the property evenly and each of the joint tenants has the entitlement in law to possession of the whole property. [ie no one joint tenant is in any way restricted from using any one part of the property].

(h) Joint Tenancy is the most common way for a couple to own real property.

(i) The mortgage of a Joint Tenancy property requires the unanimous agreement of all joint tenants.

(j) A sale of the entire property requires the agreement of all joint tenants, however, with the exception of a matrimonial home, any one joint tenant can sell their interest thereby automatically severing the joint tenancy and creating a tenancy in common.  It is not necessary to apply to the courts to sever a joint tenancy.

(k) A joint tenant may in certain cases and geographical areas, be able to apply to the courts to have the land severed and provide each owner with a separate and distinct piece.

(a) Tenants in Common is a form of ownership whereby each tenant holds a percentage interest in property. If one of the owners dies, that owner's interest in the property passes to their estate to be passed on according to their will.

From a legal perspective, the terms “Co-tenancy” or “Co-tenants” are broad enough to be comprise both joint tenancy and tenancy in common, but from an accounting and tax perspective these two terms are normally used to represent a tenancy in common relationship.

(b) Tenants in Common can own the property in unequal shares, ie in differing percentages.  Also, an “Agreement between Tenants in Common” may be entered into which could override the rights which tenants would normally have under law.

(c) Unlike non-land property, land owned by two or more persons is presumed to be owned by them as tenants in common unless the title expressly states that they are joint tenants.

(d) Tenants in Common can hold equal or unequal shares in the property.  Every party owns an undivided share in the property and as a result is free to possession of the whole property.  For example, there could be five persons who are tenants in common, but four of them could own 1/10 of the property each, and the fifth person might own 6/ 1 0 of the property.

(e) If the holder of a tenancy in common desires, either to sell or mortgage their interest in the property, that can be done by them without the conscent of the other tenants.  It is also possible for a tenant in common apply to the courts to “partition” the property or to sell the entire property and distribute the net proceeds of sale proportionately.

(f) Tenancy in common does not carry a right of survivorship as in joint tenancy.  In other words, if one of the tenants in common dies, the interest does not go to the other tenants, but goes to the estate of the deceased.  If there is a will, it is distributed under the terms of the will.  If the deceased person does not have a will, there is provincial legislation dealing with that type of situation, and the person's assets, which would include the tenancy interest, would be distributed to relatives according to the legislation.

(g) There are a variety of reasons why some people prefer tenancy in common to joint tenancy:

• If you were purchasing property for investment purposes with persons who are not relatives, you would not want them to automatically have your interest in the property in the event of your death.
• If you have been formerly married, have children from a earlier relationship, and have since remarried, you may perhaps desire to state in your will that a clear piece of the worth of the estate go to those children independently or jointly.  The only way this can be dealt with is in tenancy-in-common circumstances, because the interest would be deemed to be an asset of one's estate.
• If you were putting uneven amounts of money in the property, a tenancy-in-common arrangement would be a sign of those various contributions in terms of the proportion of interest in the property.

The above information is general in nature. Please ensure that you contact both Canham Rogers, Chartered Accountants and your solicitor to discuss any specific transactions prior to implementation. We would be pleased to assist you in these and other area’s of your business.