Co-Owning Property In Ontario

In Ontario, there are two ways you can co-own a property with another person: joint tenancy or tenancy in common.

In a joint tenancy, all tenants (two or more) share equally divided interests in the property. The tenants also hold a “right of survivorship,” which means that if one tenant passes away, the deceased’s share of interest is divided equally between the remaining tenant(s), irrespective of whether the deceased had a will directing otherwise.

In a tenancy in common, two or more tenants can hold either equal or unequal interests in the property and no tenant holds a right of survivorship. This means that if one tenant passes away, the deceased’s share of interest is transferred to their estate to be distributed in accordance with their will, and the interests of the tenants remain unaffected.

In Ontario, unless you explicitly express intention to co-own as joint tenants, it is assumed that you are holding the property as tenants-in-common. Joint tenancy is more common among spouses, whereas tenancy in common is more common among non-spouses.

Which type of co-ownership is right for you?

When deciding which option is best for you, you should carefully consider your needs alongside the short-term and long-term benefits and risks associated with each type of co-ownership.

The right of survivorship in a joint tenancy means that the property does not form part of your estate, which means that probate fees and taxes do not apply when the property transfers to the remaining joint tenant(s) and estate administration delays or complications can be minimized. Thus, a joint tenancy can save you money, time, and potential headaches.

However, depending on who you decide to register as a joint tenant, the process may not always be smooth sailing. For example, if you are a parent adding your adult child as a joint tenant, depending on your child’s contribution to maintaining the property, the right of survivorship upon your death may be challenged. In such instances, extra documentation may be required to establish the right of survivorship.

Tenancy in common, on the other hand, can be beneficial in situations where each tenant wishes to retain the ability to either sell or distribute their share according to their will. While this option allows for more personal flexibility, it comes with some risks. For example, one tenant may choose to sell their share of interest in the property to another person without informing the others. You may also potentially be liable for debts incurred by another tenant.

Converting from one type of co-ownership to another

If you decide afterwards that the type of co-ownership you initially chose is not the best for you, it is possible to “sever” or convert a joint tenancy into a tenancy in common, and vice versa.

If you have any questions related to co-ownership, contact us here!

Author:

Firoozeh Rose Bahrami B.Sc. LL.B.

Senior Partner

e: rose.bahrami@realtycarelaw.com

Irene Lim

Summer Student