Purchasing a property is one of the most significant decisions a person can make in their lifetime. Regarding co-owning a property, there are two ways to hold title: joint tenancy and tenants in common. Each type of ownership has pros and cons, and it is important to understand their differences to make an informed decision.
Understanding Co-Ownership Options
Co-ownership is common in Ontario, where two or more people own a property together. There are two types of co-ownership: joint tenancy and tenancy in common. Knowing the difference between the two is important if you are considering co-ownership.
Joint tenancy is where two or more people own a property together with equal shares. This is often preferred by married couples or common law partners as it allows for a seamless transfer of ownership upon the death of one of the owners. Joint tenancy includes the right of survivorship, so if one owner dies, the surviving owner automatically gets the property. This can be a big advantage as it avoids probate and ensures the property stays with the surviving joint tenant.
Tenancy in common is where multiple owners hold a specific percentage of the property. The percentage of ownership can be unequal and each owner can deal with their share separately. Tenancy in common does not include the right of survivorship, so if one owner dies, their share of the property goes to their estate and is distributed according to their will or provincial laws. This provides more flexibility in ownership but can also create more complicated legal situations.
Joint Tenancy
In this type of ownership joint tenancies are a form of co-ownership where owners have equal rights to the property. In Ontario joint tenancy includes the right of survivorship which means if one owner dies the surviving owner automatically owns the property without the need for probate. That can be a big advantage since it can save time and money on legal fees.
Joint tenancy is common among married or common-law partners because it can be beneficial. If one partner dies joint tenancy allows for a seamless transfer of ownership and the surviving spouse/partner becomes the sole owner of the property.
But joint tenancy has its downsides. Each owner has an equal say in decisions regarding the property which can lead to disagreements or conflicts. And if one owner wants to get involved in a transaction such as a sale the other owner(s) have to agree to the sale.
Tenants in Common
Tenants in common is another form of co-ownership where multiple owners own a percentage of the property. The percentage of ownership can be unequal, and each owner can manage their interest in the property separately. Unlike joint tenancy tenants in common do not have the right of survivorship. If one owner dies, their share of the property does not automatically pass to the other owner(s); instead, it passes to their estate and is distributed according to their will or provincial laws.
One of the advantages of this type of ownership is flexibility. Owners can determine and hold different percentages of the property, reflecting their financial contributions or other factors. Tenants in common can also sell their share of the property without the consent of the other owner(s).
On the other hand, tenants in common can also have some drawbacks. Finding a buyer to share the title with the remaining owners can be tough if one owner wants to sell their share. Additionally, if one owner dies without a will, their share of the property will be distributed according to provincial intestacy laws, which may not align with their wishes.
Comparing Joint Tenancy and Tenants in Common
When deciding between joint tenancy and tenancy in common you need to consider the pros and cons of each. Joint tenancy allows for a seamless transfer of ownership upon the death of one owner, but it also means each owner has an equal say in decisions regarding the property. That can lead to disagreements or conflicts if the owners don’t see eye to eye on how to manage or use the property.
Tenancy in common offers flexibility in ownership percentages, owners can determine and hold different percentages of the property. That can be useful if the co-owners have made unequal financial contributions or have different investment goals. However, this type of ownership can be more complicated, as each owner’s share can be dealt with separately. Finding a buyer to share the title with the remaining owners can be tough if one owner wants to sell their share.
In the end, it all depends on the individual circumstances and goals of the co-owners. It’s recommended that co-owners consult with a lawyer or real estate professional to ensure the ownership structure reflects their wishes and is legally sound. By considering the pros and cons of each option co-owners can make an informed decision that suits them and minimizes the risks.
Choosing Between Joint Tenancy and Tenants in Common
Deciding the form of ownership is an important factor and should be considered alongside the unique circumstances of the property and the owners. In a tenancy in common, co-owners can obtain ownership of their interests in the property from different owners at various times. Each form of ownership should be considered as they can potentially have significant consequences for owners in the future.
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Summary
It is recommended to consult with a lawyer or real estate professional to ensure that the ownership structure reflects the owners’ wishes and is legally valid. By carefully considering the advantages and disadvantages of joint tenancy and tenants in common, owners can make an informed decision that meets their needs.
The information provided above is of a general nature and should not be considered legal advice. Every transaction or circumstance is unique, and obtaining specific legal advice is necessary to address your particular requirements. Therefore, if you have any legal questions, it is recommended that you consult with a lawyer.
