Naomi Venoit, Associate
When two or more parties choose to acquire a property together, how the parties will take title to the property is a critical decision. There are two main classes of co-ownership in Nova Scotia: Joint Tenancy and Tenancy in Common.
Taking title as joint tenants means that the joint tenants each own an equal, undivided interest in the whole property. In addition, joint tenancy carries with it the right of survivorship. This means that when one joint tenant dies, his or her interest in the property immediately passes to the remaining surviving joint tenant(s) by right. In other words, a joint tenant’s interest in land does not pass through his or her estate.
There are benefits to owning property as joint tenants, particularly in the context of estate planning. For instance, the effect of the right of survivorship is that, because the property does not form part of the estate of the deceased, it is not subject to probate fees. However, there are also drawbacks to joint tenancy, one being that the property may be at risk to claims by any joint tenant’s creditors. Further, there is a loss of control associated with joint tenancy—a joint tenant cannot sell his or her interest in the property without the consent of the other joint tenant(s).
Tenants in Common
A tenancy in common also creates joint legal ownership. However, unlike joint tenancy, tenants in common can own equal or unequal portions of the property and are free to sell their share of the property without the consent of the other owner(s). In addition, the right of survivorship does not attach to a tenancy in common. Therefore, when one owner dies, his or her interest will not automatically pass to the surviving owner(s). Rather, the deceased’s interest will form part of his or her estate and be distributed according to the deceased’s will, or, if the deceased did not have a will, the deceased’s interest will pass to his or her heirs pursuant to the Intestate Succession Act.
In some cases, the parties may decide that title will be held by one party only. This route may be chosen for tax planning purposes or to protect the property from exposure to creditor claims. However, be wary of possible unintended consequences that may follow, particularly if the party who took title dies without a will or in the event that the relationship falls apart.
What type of ownership is right for you?
While joint tenancy is a common form of co-ownership among spouses, it is not always the best option. Ultimately, determining what type of ownership will best achieve your goals depends on a number of factors and should begin with a discussion with your real estate or estate planning lawyer. For more information on how we can help with matters related to property ownership, please contact our Real Estate Department.
*This article is meant to be for information purposes only and is not intended to be legal advice or opinion. If you have any further questions please consult a lawyer. Many of the statements in this blog post are general principles which may vary depending on each person’s case.