Canada: Joint Tenancy, A Primer

Last Updated: July 19 2017
Article by Margaret R. O'Sullivan

Holding property jointly has become a popular estate and incapacity planning technique, perhaps because it's simple and inexpensive. Many of you might encourage clients to hold assets jointly to save probate fees, but, by doing so, you're potentially ignoring myriad tax, matrimonial, creditor and ownership issues.

In fact, joint tenancy, which is an old, complicated and relatively obscure legal doctrine, is the subject of a growing body of case law. For example, using a joint account to manage an incapable person's affairs, as when an account is held by an elderly parent and a child, has resulted in a stream of cases to determine ownership rights when the parent dies and whether rights of survivorship in favour of the child apply or not.

As the courts continue to deal with joint tenancy, more clarity has ensued, so it's helpful to re-examine the fundamentals of joint tenancy, its requirements and how it can be terminated.

Joint tenants versus tenants in common

There's a lot of confusing terminology, and clients are often uncertain how they hold title to their assets, including their home. Are they joint tenants, or tenants in common?

The law presumes that property is held as tenants in common, which means that each owner has a fixed, divided ownership interest, whether it be 50% each or some other combination. On death, each owner's respective interest falls to his or her estate.

Joint tenancy, on the other hand, is a form of shared ownership and creates an undivided ownership in the property as a whole. If there's a right of survivorship, the last survivor is entitled to all the property on the death of the other joint tenant or joint tenants.

Four unities required for joint tenancy

There are four requirements, known as the four unities, to create a joint tenancy:

Common law versus civil law

Common law uniquely allows property ownership as joint tenants with right of survivorship. In contrast, joint tenancy is foreign to civil law and, thus, most of the world. For example, forms to open bank and investment accounts in Canada usually highlight in the section dealing with joint accounts that such accounts aren't applicable in the province of Quebec—a civil law jurisdiction. The same holds true for real property: a home and other real estate located in Quebec can't be held as a joint tenancy with right of survivorship.

  1. Unity of interest. Each owner's interest must be identical in respect of duration, extent and nature. For example, if a property is held by three owners, each must have a one-third interest.
  2. Unity of possession. Each owner must have an equal, undivided ownership in the property, and no one joint owner can have exclusive possession or ownership in all or part.
  3. Unity of term. Each owner must own the interest at the same time and for the same period.
  4. Unity of title. Each owner's interest must be the same and must be created at the same time in the same document.

A failure of any of the above can result in the joint tenancy being severed, and create a tenancy in common instead.

Terminating a joint tenancy

For cases of joint tenancy with right of survivorship, controversy surrounds whether assets are held in trust for the person who transferred them and, on death, for his estate; or whether the transferee is the beneficial owner and, on death, is entitled to all the property. Similarly, there's controversy over when a joint tenancy has been terminated. Recent case law has developed these principles further.

There are certain acts that can sever a joint tenancy.

One is if a joint tenant, where allowed under applicable land registry rules, transfers title to her share of the property to herself. Such a transfer is usually done without notice to the other joint tenant(s) and results in unity of title being destroyed. Another such act is if one joint tenant sells his interest or mortgages it. A third example is a judicial sale of the property. In Ontario and many other jurisdictions, where there are co-owners of land and co-ownership of the property has broken down, any of them can make a court application for the partition and sale of the land by court order, and for division of the sale proceeds.

A joint tenancy can also be severed by a written agreement to do so. For example, a separation agreement pursuant to a marital breakdown may contain such a provision.

More challenging is that a joint tenancy can also be severed if the joint owners have acted in a way that treats their tenancy as tenants in common and thus terminates their joint tenancy. As a result, disputes can arise where, for example, a joint tenant dies and it's unclear whether the property passes by right of survivorship or not.

This very issue was dealt with by the Ontario Court of Appeal in Hansen Estate v Hansen (2012 ONCA 11 CanLII), where the court took the opportunity to set out the requirements for a joint tenancy and how it can be severed. The court held that each case must be assessed on its own facts to determine whether the parties have mutually treated their interests as a tenancy in common and not a joint tenancy.

In this case, a marital breakdown had occurred. The wife had moved out of the home and was having it appraised for their separation agreement. Meanwhile, the husband changed the locks, put accounts for household expenses in his name only and changed his will to remove the wife as beneficiary. When the husband died, the wife asserted that the property passed to her by right of survivorship. The husband's executors maintained that the joint tenancy had terminated based on the steps the parties had taken, and they sought a declaration by the court that the husband's estate was entitled to a one-half interest in the home. The court held, based on the facts, that the parties had terminated the joint tenancy and the husband's estate was entitled to a one-half interest in the home.

Cases involving joint property will continue to arise, no doubt, as many issues centre on the intention of the parties and their conduct. Each case is unique, so clients should be cautioned to draft joint tenancy agreements carefully.

Margaret has been an expert columnist for and Advisor's Edge magazine since 2011. You may read her columns here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Margaret R. O'Sullivan
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