Co-ownership of a property can take various legal forms, each with its own important rules and regulations for ownership rights, control and what can happen in the unfortunate event of an owner passing away. The two possible arrangements in Alberta are joint tenancy and tenancy in common. Joint tenancy involves co-owners holding equal, undivided interests in a property, along with a right of survivorship, meaning the surviving owner(s) automatically inherit the deceased’s interest independent on any will. In comparison, tenancy in common allows each owner to hold a distinct, divisible share of the property with no right of survivorship, meaning their share can be transferred or inherited independently. When purchasing a home, it is important to consider which type of arrangement is best suited for you, based on your personal, family, and financial situation.
Joint tenancy: is defined as co-ownership in the context of two or more individuals who hold rights to the entire property together. One of the most significant features of a joint tenancy is the rights of survivorship. In the event of an owner passing away, their interest automatically passes on to the surviving joint tenant or tenants’. Their interest does not form par of their estate.
Tenants-in-common is defined as co-ownership of a property where each induvial involved owns their own separate and divisible share of said property. This means each owner is technically allowed to sell or transfer their share of the property at will as they don’t need consent from the other owners. Furthermore, there is no rights of survivorship for tenants-in-common. Individuals who are looking to hold separate interest are typically best suited for tenants-in common arrangements.
Most Used Situations for Either Arrangement:
Joint tenancy:
- Married spouses
- Long-term romantic partners
- Sometimes parent + child (for estate planning, this can be legally tricky, and we highly recommend consulting a lawyer on how to facilitate this)
Tenants-in-common:
- Friends buying property together
- Business partners / real estate investors
- Siblings or multiple heirs inheriting property that they want to sell in the future
- Unmarried couples with unequal contributions
Indicators Regarding What Arrangement Has Been Made
What does your title say?
A joint tenancy will usually state the owners “as joint tenants,” while tenants-in-common will list specific mathematical fractions or percentages next to each owner’s name.
What is your interest – equal, unequal, shared?
If you wish to divide interest equally, then both tenants-in-common or joint tenancy could be beneficial for your needs.
If you wish to divide interest unequally, then tenants-in-common is likely the best suited arrangement for your needs as you can divide said interest into any percentage you desire amongst owners.
If you wish to share interest, then joint tenancy is likely the best suited arrangement for your needs as this form of arrangement allows owners to hold the ownership interest together.
Commonly Asked Questions
- How do you define what percentage of interest each owner receives under tenancy-in-common? Contrary to common believe, the interest percentage does not depend entirely on each owner’s financial contribution when acquiring the property. Instead, the interest share should be defined in the transfer document choosing tenancy-in-common. The law will assume that each party has equal shares if this isn’t specified.
- What is the process of transferring land titles to the next entitled owner in under joint tenancy? In the event of a tenant passing away, their interest is automatically extinguished, and the surviving joint tenant(s) continue to be entitled to 100% of the ownership. The land does not become a part of the deceased’s estate. In the context of a sale or refinance transaction, all parties with interest tied into the property must sign off and approve of the sale before the transaction proceeds. Without the consent of all parties involved, the sale cannot proceed.
Not Sure Which Title Designation Is Right for You? Realty One Legal Can Help
At Realty One Legal we provide you with the advice you need. Our team is committed to helping guide our clients in the right direction regardless of their situations. Whether you’re an experienced homeowner or it is your first purchase, we are here for you every step of the way. If you are unsure which property title designation may be the best fit for you, our team can provide you with a clear explanation and help guide you towards your decision.
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