Joint Tenancy and Tenancy-in-Common: What's the difference?
Joint Tenancy vs. Tenancy-in-Common
When you purchase a property with another person, you have a choice as to whether you want to own the property as joint tenants or as tenants-in-common. For a joint tenancy to exist, four characteristics (or “unities”) must exist: the holding of each joint tenant must be equal in nature, extension, and duration (unity of interest); they must arise from the same act or instrument (unity of title); they must arise at the same time (unity of time); their rights must relate to the same piece of property (unity of possession)[i] The ownership in joint tenancy must be explicitly stated on the title or the transfer.
Where title is held by two people as "joint tenants" and one of the owners dies, the other owner becomes the sole owner of the Property. (The joint tenant has what is called a “right of survivorship”; basically, the surviving joint tenant inherits the whole property. Usually spouses will hold title to a property in joint tenancy.) However, where title is held as "tenants in common" and one of the owners dies, the deceased owner's interest (his or her portion) passes to his/her beneficiaries under his/her will or, if there is no will, to his/her heirs in accordance with intestacy law. Basically, under a tenancy-in-common, the interest in the property forms part of your estate and is distributed as the rest of your estate is distributed.
Conversely, with joint tenancy the whole property is jointly owned i.e. there is no percentage of ownership for each owner while with tenancy in common, you can divide the ownership any way you like for e.g. 50% - 50% ownership, 90% - 10% ownership, 75% - 25% ownership but there is no right of survivorship, so a grant of probate from the Court of Queen’s Bench would be necessary to pass your interest to your heirs.
When there are more than two owners there are three title/ownership options: 1) all of the owners can be on title as joint tenants with each other 2) all of the owners can hold title as tenants-in-common 3) some of the owners could hold title in joint tenancy with other owners and the remaining owners could hold as tenants-in-common with the joint tenants.
If no ownership is indicated on a title, the default is a tenancy in common. A joint tenancy can only be created if the title explicitly has the words, “joint tenancy” on the title. Therefore, it is very important that if you wish to hold a property as joint tenants that it be expressly stated on the title. One of the advantages of holding property in joint tenancy is that upon the death of one owner, no probate is required to transfer the property into the names of the co-owners. (Keep in mind that the title only goes to the co-owners not the heirs of the deceased owner. If the heirs and the surviving owners are different people, then joint ownership may not be the way you want to hold title.) Upon the death of a co-owner, the surviving co-owners must submit a declaration to the Land Titles Office with a copy of the deceased owner’s death certificate and the title is changed by removing the deceased owner’s name from the title. In contrast, for a tenancy-in-common, a probate application is required to transfer the deceased owner’s interest in the property to his or her heirs.
For example, Anne and Bob are a married couple and they purchase a property and register the title as joint tenants. If Anne dies before Bob, Bob becomes the owner of Anne’s interest by right of survivorship. If Bob dies before Anne, Anne becomes the owner of Bob’s interest by right of survivorship and Bob must submit a declaration at the Land Titles Office to change the title to stand solely in his name. When they both die, the last survivor, will pass the property to his or her heirs.
On the other hand if Anne and Bob purchase a property and register the title as tenants-in-common with a 50% interest each and Anne dies before Bob, Anne’s 50% interest goes to her heirs. Now, if Anne’s will states that her estate is to be divided with 90% going to Bob and 10% to XYZ charity, Bob will not receive the entire 50% that belonged to Anne. Anne’s will will also have to be probated before Bob can receive his inheritance from Anne’s estate.
Severing a joint tenancy
A joint tenancy can be severed by a person acting on his or her own share, by a mutual agreement, or by any course of dealing sufficient to make known that the interests of all were mutually treated as constituting a tenancy in common.
[i] Definition from Bruce Ziff , Principles of Property Law, 3rd edition (Scarborough, ON: Carswell, 2000) at 302