Joint Tenancy vs. Tenancy in Common in Canada: Understanding the Key Differences

When it comes to owning property in Canada, there are two main types of ownership: joint tenancy and tenancy in common. Understanding the differences between these two types of ownership is crucial, as it can have significant implications for co-owners’ rights and responsibilities. In this article, we will discuss the key differences between joint tenancy and tenancy in common and help you decide which one is right for you.

Joint Tenancy:

Joint tenancy is a type of ownership where two or more people share equal ownership of a property. One of the most significant features of joint tenancy is the right of survivorship, which means that if one co-owner dies, their share of the property automatically transfers to the surviving co-owner(s). This transfer happens regardless of whether the deceased co-owner had a will or not. As a result, joint tenancy can be an effective way to avoid probate fees and simplify the transfer of property ownership after a co-owner’s death.

In joint tenancy, each co-owner has an equal share of the property, and all decisions related to the property must be made unanimously. For example, if one co-owner wants to sell the property, all co-owners must agree to the sale. Similarly, if one co-owner wants to make changes to the property, all co-owners must approve the changes.

Tenancy in Common:

Tenancy in common is a type of ownership where two or more people share ownership of a property, but unlike joint tenancy, they do not necessarily have equal shares. In tenancy in common, each co-owner can own a different percentage of the property, and there is no right of survivorship. This means that when a co-owner dies, their share of the property is passed on to their heirs or beneficiaries, rather than to the remaining co-owners.

In tenancy in common, each co-owner has the right to use and enjoy the entire property, regardless of their ownership percentage. However, the responsibility for expenses related to the property, such as maintenance and repairs, is divided among the co-owners based on their ownership percentage. For example, if one co-owner owns 70% of the property, they would be responsible for 70% of the property’s expenses.

Key Differences Between Joint Tenancy and Tenancy in Common:

Right of Survivorship:

Joint tenancy includes the right of survivorship, while tenancy in common does not.

Ownership Shares:

Joint tenancy involves equal ownership shares, while tenancy in common allows for unequal ownership shares.

Transfer of Ownership:

In joint tenancy, when a co-owner dies, their share of the property automatically passes to the surviving co-owner(s). In tenancy in common, when a co-owner dies, their share of the property passes to their heirs or beneficiaries.

Liability for Expenses and Debts:

In joint tenancy, co-owners are jointly liable for expenses and debts related to the property. In tenancy in common, each co-owner is responsible for their share of the expenses and debts.

Choosing Between Joint Tenancy and Tenancy in Common:

When deciding between joint tenancy and tenancy in common, there are several factors to consider, including:

Relationship Between Co-Owners:

Joint tenancy may be more appropriate for co-owners who are married or in a long-term relationship, while tenancy in common may be more appropriate for co-owners who are not related or have different ownership goals.

Estate Planning Goals:

Joint tenancy can be an effective way to avoid probate.

Joint tenancy and tenancy in common can have different effects on estate planning in Canada.

In joint tenancy, when one co-owner dies, their share of the property automatically passes to the surviving co-owner(s), regardless of whether they had a will or not. This means that joint tenancy can be an effective way to avoid probate fees and simplify the transfer of property ownership after a co-owner’s death. However, joint tenancy may not be the best choice for estate planning if one co-owner wants their share of the property to go to someone other than the surviving co-owner(s), such as their children or other beneficiaries.

In contrast, in tenancy in common, each co-owner’s share of the property can be passed on to their heirs or beneficiaries according to their wishes, rather than automatically going to the remaining co-owners. This can give co-owners more control over who inherits their share of the property after their death. However, tenancy in common can also be more complex and may involve probate fees, which can vary depending on the province.

When it comes to estate planning, it’s important to consider your goals and priorities and consult with a legal professional who can provide guidance on the best ownership structure for your particular situation. They can also help you draft a will or other estate planning documents to ensure that your wishes are carried out after your death.

What happens to the mortgage when a joint tenant dies?

When one of the co-owners of a property with a mortgage dies, the remaining co-owners are still responsible for paying the mortgage. If the property is held in joint tenancy, the surviving co-owner(s) will automatically inherit the deceased co-owner’s share of the property and become responsible for the entire mortgage. However, if the remaining co-owners are unable to pay the mortgage, the lender can foreclose on the property.

In tenancy in common, the deceased co-owner’s share of the property will pass on to their heirs or beneficiaries, who will become responsible for their share of the mortgage payments. The remaining co-owners will still be responsible for their share of the mortgage payments, and if they are unable to pay, the lender can foreclose on the property.

It’s important to note that when a co-owner dies, the mortgage on the property does not automatically become due. However, the lender may require that the mortgage be refinanced or paid off if the remaining co-owners are unable to make the payments. Additionally, if the property is sold to pay off the mortgage, the proceeds will be divided among the co-owners based on their ownership shares. If mortgage refinancing is required to make mortgage payments more manageable, it is important to talk to a mortgage broker before going into arrears.

For more information on mortgage refinancing and exploring other mortgage options call 416-912-6200.