Joint Tenants vs Tenants in Common

Two terms that often come up in property ownership in Canada are Joint Tenants and Tenants in Common. While they might seem similar, they’re different. We’ll review each of these terms to help you understand their differences.

What is Joint Tenancy?

Joint tenancy, or joint tenancy with right of survivorship (JTWROS) in full, refers to the legal ownership of a property (typically real estate, but also extends to other assets), where two or more parties are jointly named as the property holders. 

The exclusive rights and control of the property, as well as legal obligations, are divided into shares equal in size amongst each party in the joint tenancy.

A joint tenancy can only be created between parties when acquiring the property at the same time, and the right of survivorship means that upon death, a co-owner’s interest in the property is automatically transferred to the remaining owning parties. 

As such, this type of legal agreement may be entered into by parties wishing to pass ownership directly to the remaining survivor(s). If the specific conditions for forming or maintaining a joint tenancy are not properly met, the property ownership in such a case may be treated in whole, or in part, as a tenancy in common. 

An example of this would be the sale of a property share by a co-owner under a joint tenancy, to an outside party – the outside party joins the ownership via tenancy in common when obtaining the property share in its current interest size, while the rest of the co-owners continue to hold equal shares in joint tenancy of the remaining interest.

What is Tenancy in Common?

Tenancy in common (TIC) is another form of joint property ownership, one where each individual party’s shares may differ in interest size. Since there is no right of survivorship in tenancies in common, the death of a co-owning party (will result in the transfer of their property interest and share to their estate or willed heirs.

This type of agreement may be preferable in situations where co-owning parties – also known as tenants in common – have supplied or invested different quantities of funds into the property, and/or where the parties lack spousal or familial ties to one another.

What are the Upsides and Downsides of Each?

Joint Tenancy Pros and Cons

The upsides to joint tenancy are:

  • Equal Power and Equal Gain
    No co-owner holds more share or deciding power than another co-owner, as all shares are equal in size and interest. Profits or financial gains are also equal, such as commercial/rental revenues, or the discovery of natural resources.
  • No Probate
    Joint tenancy avoids entering into the process of probate in court when the owning party dies.
  • Right of Survivorship
    Joint tenant(s) automatically and immediately inherit ownership of the deceased party’s share, equally.
  • Tax Benefits
    Tax benefits/exemptions may be received, for example state gift tax requirements in some cases.

The downsides to joint tenancy are:

  • Level of Responsibility
    Potentially increased responsibility, as all burden of taxes, mortgages, repair or maintenance costs, etc., must be equally shared amongst all co-owners. However, individually committed losses or wastes against the property under joint tenancy must be individually reimbursed to compensate all other co-owning members of the tenancy.
  • Consensus Required
    Sale of property may be complicated or delayed by disagreement or conflict between joint tenants.
  • Inheritance not permitted
    Co-owning parties may not bequeath their share of their property under joint tenancy after death to heirs.

Tenancy in Common Pros and Cons

When it comes to tenancy in common, the upsides are:

  • Division of Labour
    Individual parties in a tenancy in common may be allocated different responsibilities and costs, as opposed to all responsibilities shared equally between all co-owning parties – this may allow for increased efficiency.
  • Collective Forces
    The possibility of differently sized property shares with rights and interest retained for all parties allow for more people to be able to benefit from property co-ownership via tenancy in common, such as a scenario with a group purchase of a property that would not have been individually affordable for any or all members of the groups. 
  • Financial Flexibility
    Tenants in common allow for possible sale or transfer of ownership shares to new investors, buyers, or family members. This type of legal agreement also allows the transference of property shares to heirs.

The downsides to tenancy in common are:

  • Dissenting Parties
    Each tenant in common has the right to sell their share of the property to anyone unless provisions are in place, such as agreements granting other co-owners the right of first refusal if a member of the tenancy wants to sell, or those requiring a sale to have approval from other members.
  • No Right of Survivorship
    Complications are likely to arise when the heir of a co-owner inherits the property share of a tenant in common and decides to sell it. Other co-owning tenants must buy them out, file a partition action requesting a court-ordered sale, or deal with the sale of the share to an outside party.

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