What is the difference between joint tenancy and tenants in common when buying a home?

In Ontario, there are several different ways of taking title to a home. You could be the sole owner or own the property jointly with someone else (typically a spouse or common-law partner). The two most common ways of owning a home with another person are joint tenancy and tenancy in common. If you are looking to purchase a home with another person, you will need to decide how you wish to hold the title with them.

Joint tenancy

In the case of joint tenancy, co-owners have an equal interest in the property. To hold joint tenancy, there must be four unities:

  • Unity of title (the co-owners own the same property)
  • Unity of interest (the co-owners have equal interest)
  • Unity of possession
  • Unity of time

If one of these four unities does not exist, then it results in a tenancy in common.

Right of survivorship with joint tenancy

One of the main advantages of joint tenancy is the Right of Survivorship which means that the surviving co-owner inherits the interest of the deceased in the property. When one co-owner dies, the other automatically becomes full owner regardless of what is stated in the deceased’s will.

While joint tenancy is typically used by spouses, it can also be used to pass the property on to another such as a trustee as part of an estate planning strategy.

Tenancy in common

Tenancy in common differs from joint tenancy in that each owner has a proportionate (percentage) interest in the property. One owner may own a greater percentage. If one owner dies, then their percentage of the property goes to their estate and is distributed according to their will.

Things to consider with tenancy in common

If purchasing a home under a tenancy in a common agreement, it is important to spell out the rights to the property in writing. For example, is each owner required to pay a proportionate share of the utilities? Or can a third person who is not the owner live in the home? Who will make the decisions about repairs and maintenance to the property? What are the rights of the co-owners when it comes to selling their shares? Before you enter into a tenancy in a common arrangement, it is in your best interest to get answers to these and other questions.

Can joint tenants become tenants in common?

Yes, it is easy to convert a joint tenancy into a tenancy in common – this can even be done unintentionally. For example, this may occur if one of the owners enters an option to purchase or the joint tenancy may be severed if one of the co-owners goes into bankruptcy.

If there is doubt as to whether a title is held in joint tenancy or tenancy in common, the court will typically lean toward tenancy in common.

Estate considerations

If you are purchasing a property with another person, it is important that you know how you want to hold the title and how that will impact your estate. If your joint tenancy is unintentionally severed, it could have serious consequences on how your or your spouse’s estate is distributed.

Contact Minhas Lawyers today

If you have questions about your home title or your estate, contact us today to speak to a lawyer. We can help ensure that you are holding your title as intended and discuss your options should you wish to change it. Contact us today to book a consultation with our real estate lawyers!

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