Difference between joint tenancy and tenancy in common home ownership
When a single home owner passes, the title will fall into the estate of the homeowner either according to intestate law (Succession Law Reform Act) or in accordance to the will and the last testament of the home owner, if he had one.
When two or more owners (including corporations) own title to a property or a home, their either hold it as tenants-in-common or as joint tenants.
Tenancy-in-common: When two or more owners own title as tenants-in-common, they each have a divided percentage interest in ownership of the property. When such ownership is unspecified it is intended to be equal.
One disadvantage of tenancy-in-common is that, when one owner dies, their share of the property pass into their estate dealt pursuant to either intestacy or will as applicable.
When it falls into the estate, it is subjected to an estate administration tax (1.5% of the total appraised value of the property exceeding $50,000). In other words, there is no right of survivorship.
Joint Tenancy: Joint tenancy with a right of survivorship is a recommended title ownership structure to avoid probate or estate administration tax. When one joint tenant passes or ceases to be an owner for one or the other reason, the remaining joint tenant continues as the owner, becoming absolute owner of the land. Hence the term ‘right of survivorship’. The property, therefore does not pass into estate and is not subjected to estate administration tax.
Caution must be taken that any joint tenancy between a financially independent adult child and a parent give rise to a rebuttable resulting trust in favour of the parent’s estate unless the adult child can prove otherwise.
When both or all joint tenants die at the same instance, the joint tenancy is treated as tenancy-in-common.
Severance of joint tenancies: A joint tenancy can be converted, unilaterally to a tenancy-in-common by severance of such joint tenancy. The severance requires a clear, unequivocal action.
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