Joint tenancy vs Tenancy in Common

Choosing Between Joint Tenancy and Tenancy in Common

When multiple purchasers enter into a Purchase Agreement for a property, your lawyer would ask whether you wish to hold title as “Joint Tenants” or “Tenants in Common.” Below is a brief explanation of these two forms of co-ownership under land law.

Joint Tenancy: Unified Ownership

Under joint tenancy, all co-owners hold an undivided interest in the entire property. There is no specification of individual ownership percentages—each joint tenant owns the whole property together with the others. This means no single joint tenant can sell or transfer a portion of the property independently; any transaction must be made jointly by all owners.

It’s important to note that joint tenancy does not imply equal shares—it reflects a shared and inseparable interest in the entire title.

Tenancy in Common: Defined Shares

In contrast, tenancy in common allows co-owners to hold distinct shares of the property. These shares can vary based on each party’s financial contribution. For example, two purchasers may each hold a 50% interest if they contributed equally, or different percentages if their investments differ.

Tenants in common have the flexibility to sell, transfer, or bequeath their individual shares. This structure is commonly used among friends or investors, and it’s advisable to establish a co-ownership agreement to clarify each party’s rights and responsibilities. Our lawyer can assist with drafting such an agreement.

The Right of Survivorship

A key feature of joint tenancy is the “right of survivorship.” When one joint tenant passes away, their interest automatically transfers to the surviving joint tenants. This is why many married couples choose joint tenancy—it ensures seamless transfer of ownership without the need for probate.

To formalize this transfer, the surviving joint tenant can apply for a Survivorship Application to remove the deceased’s name from the title.

Estate Planning Considerations

Joint tenancy offers estate planning advantages. Because the deceased’s interest passes directly to the surviving owner, the property is not subject to probate, potentially reducing estate administration taxes.

In contrast, when a tenant in common dies, their share becomes part of their estate and is subject to probate. If your lawyer did not confirm your preferred ownership structure during registration, the default is typically tenancy in common. Therefore, it’s crucial to communicate your preference clearly, as it can significantly impact your estate planning.

For personalized guidance on your ownership structure, please contact our office. We’re here to help you make informed decisions.