Most homeowners will have at least heard of the term “Joint Tenancy”. In British Columbia, when you own property with another person, you can own it as Joint Tenants, or you can own it as Tenants in Common. If you are Joint Tenants, you share the property completely and equally. If you are Tenants in Common, you each own a share of the property, and those shares do not have to be equal; one can own 1% and the other 99%.

Another major characteristic of Joint Tenancy, and one reason it is often used in estate planning, is the “right of survivorship”. This means that at the moment of death of one owner, the surviving owner automatically acquires the entire ownership of the property.

Many people use Joint Tenancy in their estate plan to avoid having a property become a part of their Estate. When a person dies owning real estate, that property becomes an asset of their estate. In order to sell the property, the executor of the estate must apply to the Supreme Court of British Columbia for a Grant of Probate and pay the associated Probate Fees (approx. 1.4%). That Grant of Probate must then be filed with the Land Title Office before you can transfer legal title to the property. One goal when owning property as Joint Tenants is to avoid the necessity and cost of applying for the Grant of Probate.

There are also risks to owning property in Joint Tenancy. The one that I want to focus on today is the risk of loss during your lifetime. If you decide to put your house into Joint Tenancy for the sole purpose of passing the property on after you die, you could end up giving it away too early.

If you put your house into Joint Tenancy with your children, that property is now open to attack by any of your children’s creditors or “spouses”. With common law relationships becoming more common, so are unexpected claims by common law spouses.

Another risk that no parent wants to consider is the possibility that your child might break off their equal share and deal with it without the parent’s knowledge. A part owner of property can arrange to sever a Joint Tenancy without the other owner even knowing. It can even be severed unintentionally if the two owners appear to be dealing with the property as if they consider it to be owned in separate shares. It then becomes a Tenancy in Common, and the part owner can mortgage or even sell their share of the property without the knowledge or consent of the other owner!

As a lawyer, it is often my role to point out the worst case scenarios. However, there are many potential benefits to owning property as Joint Tenants if it is done correctly. It is always a good idea to consider the risks, guard against the ones you can and get the advice of a professional.

The information provided above is for educational purposes only. This information is not intended to replace the advice of a lawyer or address specific situations. Your personal situation should be discussed with a lawyer. If you have any questions or concerns, contact a legal professional.

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