Understanding Joint Tenancy vs. Tenancy in Common in Real Estate Ownership

Written by Sukhman Sandhu

Sukhman Sandhu is the Founder & Managing Director of Sukh Law. Sukhman's practice focuses upon complex real estate and commercial law transactions and related litigation. Licensed to practice law in the Province of Ontario, Sukhman currently represents individuals, small businesses and large institutions and maintains a great track record of obtaining successful results.

June 25, 2024

Understanding the differences between joint tenancy and tenancy in common is crucial for anyone considering co-ownership of real estate in Ontario, Canada. These two forms of ownership have distinct legal implications, particularly concerning the rights of survivorship, the division of ownership, and the handling of the property upon the death of an owner. As a real estate lawyer in Ontario, I often guide clients through these nuances to help them make informed decisions that align with their personal and financial goals.

Joint Tenancy

Joint tenancy is a form of co-ownership where each owner holds an equal, undivided interest in the property. This means that all joint tenants have identical shares and equal rights to the entire property. One of the most significant features of joint tenancy is the right of survivorship. When one joint tenant dies, their interest in the property automatically passes to the surviving joint tenant(s), bypassing the deceased’s estate and will.

Key Features
  • Equal Ownership: Each joint tenant has an identical share in the property.
  • Right of Survivorship: Upon the death of a joint tenant, their share automatically transfers to the surviving tenant(s).
  • Four Unities: For a joint tenancy to exist, four unities must be present: unity of title, unity of interest, unity of possession, and unity of time. If any of these unities are broken, the joint tenancy can be converted into a tenancy in common.
Termination
  • Severance: A joint tenancy can be severed unilaterally by any joint tenant, converting the ownership into a tenancy in common. This can be done through various actions, such as selling or transferring their interest.
  • Voluntary Agreement: Joint tenants can also mutually agree to terminate the joint tenancy.
Common Uses

Joint tenancy is commonly used by married couples due to the right of survivorship, which simplifies the transfer of property upon the death of one spouse. In my practice, I have found that most married couples prefer joint tenancy for its simplicity and the peace of mind it offers in estate planning.

Tenancy in Common

Tenancy in common is another form of co-ownership where tenants in common own specific, divided shares of the property. These shares can be equal or unequal, and each tenant’s share is distinct and can be independently sold, mortgaged, or bequeathed. Unlike joint tenancy, there is no right of survivorship in a tenancy in common. When a tenant in common dies, their share of the property passes to their estate and is distributed according to their will or the laws of intestacy.

Key Features
  • Proportionate Ownership: Tenants in common own specific, divided shares of the property, which can be equal or unequal.
  • No Right of Survivorship: Each tenant’s share passes to their estate upon death.
  • Flexibility: Tenants in common can freely transact with their share of the property without needing the consent of the other co-owners.
Termination
  • Buyout: A tenancy in common can end if one tenant buys out the other(s).
  • Court Proceedings: A court can also order the sale of the property and the distribution of proceeds among the co-owners.
Common Uses

Tenancy in common is often used in investment properties where multiple investors want to own a share of the property and have the flexibility to sell their interest independently. I have observed that friends, other family members, and investor partners usually opt for tenancy in common, which aligns with their need for clear, divisible ownership interests and the ability to independently manage their shares.

Considerations for Choosing Between Joint Tenancy and Tenancy in Common

Estate Planning

Joint Tenancy: Suitable for those who want to ensure the property passes directly to the surviving co-owner without going through probate, thus avoiding estate administration taxes.

Tenancy in Common: Ideal for individuals who want their share of the property to be part of their estate and distributed according to their will.

Financial and Legal Implications

Joint Tenancy: May offer tax advantages by avoiding probate fees, but can complicate matters if the co-owners’ relationship changes (e.g., divorce).

Tenancy in Common: Provides flexibility in ownership and the ability to specify different ownership percentages, but requires careful planning to manage the distribution of shares upon death.

Practical Considerations

Joint Tenancy: Often preferred by spouses for simplicity and ease of transfer upon death.

Tenancy in Common: Preferred by business partners or investors who want clear, divisible ownership interests and the ability to independently manage their shares.

Conclusion

The choice between joint tenancy and tenancy in common depends on the co-owners’ relationship, their estate planning goals, and their need for flexibility in managing their ownership interests. Consulting with legal and financial advisors is recommended to make an informed decision that aligns with personal and financial objectives. In my experience, most married couples proceed with joint tenancy, while friends, other family members, and investor partners proceed with tenancy in common, which makes both legal and practical sense.

If you require legal advice or representation with your real estate property purchase or refinancing, or have questions about residential or commercial real estate law in general, contact us at Sukh Law.

Sukh Law publishes articles for information purposes only and is not intended to constitute legal advice.

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