2 Things You Should Know Before Joint Tenancy Home Ownership

There are a couple of ways that property can be co-owned. The first is tenants-in-common where two or more people own the property. When one of those people dies, his or her interest goes into his or her estate. The other way to co-own property is joint-tenancy where two or more people own the property. If one of those people dies, the other owner(s) obtain the deceased's share. This is often the case with married couples where the property is owned jointly by husband and wife. When one passes, the other becomes full owner.

Joint tenancy is also common with aging parents who will put the property in the name of one or more of their children along with the parent. When the parent passes, the property automatically becomes the property of the child and, therefore, is outside of the estate and not subject to probate.

While joint ownership has significant advantages in estate planning, it is not without problems especially in the context where one of the owners pays nothing to become an owner. Such situations are often the subject of litigation as other siblings, or beneficiaries claim that the property only became the subject of joint tenancy to avoid probate. In those cases, claims that the property was intended to be held in trust are common.

According to the relevant legal doctrine, when the property is put into joint tenancy without the original owner receiving value for it, the presumption of a resulting trust exists. It is then up to the recipient transferee to establish that a gift was intended.

A recent case about a common law relationship illustrates the problems that can arise after a home is obtained in joint ownership. The couple dated for 21 years before purchasing. Because the woman was only working sporadically, the husband contributed the money for the down payment and made all the mortgage payments, tax payments and insurance payments. The couple cohabited for 8-10 years in the house and then separated. The husband claimed that he did not intend the house to be a gift but that the wife held the property in trust for him.

Initially, an arbitrator granted a decision to the husband, which was overturned on appeal. In overturning the decision, the court put significant weight on the fact that, at the time the property was purchased, the husband and wife both had wills making each other the beneficiary of the estate. The husband had subsequently changed his will, disinheriting the wife.

The court noted that while a will is easy to change, joint tenancy is not. You are simply not free to remove a joint tenant from ownership without their consent.

What is important about this case is that it illustrates how important it is to understand the nature of joint tenancy. It is not easily undone. You will need the approval of the joint tenant to remove them from ownership.

Additionally, in circumstances where one person receives an ownership interest without providing any value for it, it is crucial to create some record as to what is intended. Specifically, it is important to keep records as to whether the recipient is getting the ownership interest as a gift or whether they are required to hold the ownership for other family members such as siblings. Creating such a record is a minimal expense that can save you significant legal expenses later. It is strongly recommended that both the owners seek independent legal advice and document the intention and expectations regarding the ownership.

Griffith v Davidson, 2017 ONSC 187 https://www.canlii.org/en/on/onsc/doc/2017/2017onsc187/2017onsc187.pdf

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