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

Joint tenancy is most frequently characterised by the "right of survivorship" that when one joint tenant dies the title automatically continues to be held by the surviving joint tenant(s). The reason why joint tenancy enjoys the right of survivorship is the "four unities"--unity of time, unity of title, unity of interest and unity of possession.

a. Unity of Possession:

Under a joint tenancy, co-owners are "joint tenants." They hold an undivided interest in the entire property. There is no specification of individual ownership proportions—each joint tenant owns the whole property together with the others. That said, each joint tenant holds the the whole title jointly and nothing separately; any transaction must be made jointly by all owners.

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

b. Unity of Title:

The joint tenants take title through the same instrument--the same land title registration document. 

c. Unity of Time:

The interest of each joint tenant must vest at the same time.

d. Unity of Interest:

The interest of each joint tenant must be identical in nature, extent and duration.

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. In addition, co-owners under a tenancy in common are called "tenants in common."

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 passes 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.

The surviving joint tenants are recommended to make a Survivorship Application to remove the deceased’s name from the title because it will be convenient for the survivors to sell or transfer the property in the future. Our lawyer can assist you to make a survivorship application to the Land Registry Office to remove the deceased joint tenant from the title of your property.

Why your lawyer should ask you about the ownership structure?

The original common law principle was that joint tenancy was presumed if land was granted or devised to two or more persons for the same estate, unless tenancy in common was written otherwise. However, Section 13 of the Conveyancing and Law of Property Act, RSO 1990, c. C-34 reversed the common law rule and provides that  when land is granted or devised to two or more persons they take title as tenants in common unless joint tenancy is expressly written.  Therefore, the default position of taking title by two or more persons in Ontario is tenancy in common. You must let your lawyer know that you and your spouse/partner want to hold a property as joint tenants if the right of survivorship is what you want.

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. However, joint tenancy as an estate planning strategy is not without problems, especially when parents add their children as joint tenants. We will discuss this issue in another article.

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.

Severing Joint Tenancy

If two or more persons hold a property as joint tenants, can they change it to tenants in common? The answer is Yes, however the issue is far more complicated than you may imagine. I will write another short article discussing this issue.

To enquire about your ownership structure, please contact our office. We’re here to help you make informed decisions.