Joint Tenancy vs. Tenants in Common

 By Graydon Ebert, Associate 

When multiple parties purchase a property one of the important considerations to be made is how the parties’ should take title to the property. There are two options: Joint Tenants or Tenants In Common.

For the parties to take title as joint tenants there must be what is termed the “four unities”: possession, interest, title and time. The unity of possession is present where the parties each have an equal right to possession of the property. The unity of interest is present where the parties’ interest in the property is identical in size and duration. The unity of title requires that the parties’ receive their title to the property from the same document and the unity of time requires that the parties acquire their title to the property at the same time. If the four unities are present, the parties have a concurrent interest in the property in which all of the joint tenants have a unified right of possession to the whole of the property with a right of survivorship.

What is a right of survivorship? Essentially, if one of the joint tenants dies, his or her interest in the property would pass to the remaining joint tenants and would not get distributed pursuant to the provisions of a will. For example, if Adam, Bob and Chris own a property together as joint tenants, upon the death of Adam, his interest in the property would be assumed by Bob and Chris and not to a beneficiary under Adam’s will. If Bob then dies, Chris would be the sole owner of the property.

Taking title as tenants in common is different. When parties take title as tenants in common, they take title to an undivided fractional share of the whole property and do not have a right to survivorship. Tenancy in common only requires a unity of possession. Tenants in common can leave their share of the property to someone in their Will or transfer their separate interest to a third party. Using our above example, if Adam, Bob and Chris own a property together, with each owing a 1/3 interest as tenants in common, when Adam passes away, he can leave his share by Will to his wife Debbie. Then Debbie, Bob and Chris are the owners of the property.

It is important to note, that there are instances where a joint tenancy can be converted into a tenancy in common. If the joint tenants die in a manner where it is unclear as to who survived who, they will have been deemed to have been tenants in common in equal proportion unless there is a very specific intention to the contrary.

Also, a joint tenancy will end if any of the four unities required for a joint tenancy are destroyed. This would result in a tenancy in common and an end to the right of survivorship. The most common instance would be where one tenant transfers his interest in the property to another party. In this case, there is no longer unity of title or time as the third party has acquired his interest at another time and by another document. In this instance, the new party holds a proportionate interest in the property as a tenant in common and the remaining joint tenants will hold the remaining interest in the property as joint tenants. Using the above joint tenants example, if Adam decided to sell his interest in the property to Ernie, Ernie would hold a 1/3 interest in the property as a tenant in common which he could further transfer or bequeath by Will. Bob and Chris would remain joint tenants in respect of the further 2/3 interest in the property and there would remain a right of survivorship, such that if Bob were to die, Chris would own the full 2/3 share of the property as tenant in common with Ernie.

The most common instance where more than one party holds title to a property is where title to the property is held by two spouses. In this instance, the spouses will usually take title as joint tenants as this allows the property to automatically be held solely by the surviving spouse upon the death of the first spouse without the property becoming property of the first spouse’s estate.

Every situation is different and a discussion with a lawyer as to how title should be taken to the property being purchased is worthwhile so that future planning considerations can be made. The Real Estate lawyers at Barriston LLP are available to help you figure out the best way for the parties to take title to the property.

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