When buying a house, there are many factors to consider – everything from the timing of your closing to what chattels (i.e. fridge, stove, etc.) will belong to you.

One consideration that is often overlooked is the way that you as a homeowner can own the house in Canada (and in turn how it is reflected on the property title).

3 Types of Home Ownership

If you are buying a house yourself, you’d be the sole owner. Naturally, you’d also be the only person to be put on title. Simple enough, right?

Yet, things can get complicated when there are multiple homeowners, and thus multiple people going on title. This is becoming more commonplace as more and more Canadians are being priced out of the housing market. Whether Canadians are choosing to buy a home with their parents, their siblings, their friends, or even complete strangers, the same question needs to be asked when there are multiple homeowners: will the owners go on title as joint tenants or tenants in common? Here’s what you need to know about each.

What is Joint Tenancy?

Joint tenancy (more formally known as joint tenants with a right of survivorship) is a form of ownership in which each owner owns 100% of the property jointly. If one of the owners passes away their “share” (a.k.a. their interest) in the property is automatically “transferred” to the other owner(s) who have title in the property. It should be noted that technically speaking ownership isn’t transferred but rather that the owner who passes away drops off title, leaving the remaining owners still on title.

The most common example of joint tenancy is between spouses.

What is Tenancy in Common?

Tenancy in common is a form of ownership in which each owner owns a separate share of a property. The multiple owners can split ownership as they please. If one of the owners passes away, their share in the property will not pass to the other owner(s) of the property, but rather will pass on to their estate even if they don’t have a will.

An example of tenancy in common is if you and your spouse want to buy a cottage but only have 20% of the necessary funds. Your neighbours may also want to buy the same cottage property but only have 80% of the necessary funds. The four of you may want to buy the cottage as tenants in common with an 80% owned by one couple and the other 20% owned by the other couple.

Which Option is Better for Me?

There are many factors to consider when deciding whether to own a home as a joint tenant or as a tenant in common. Some basic considerations include:

• Estate Planning – if you are trying to avoid paying probate fees and taxes when a homeowner passes joint tenancy might be the right option for you as title will transfer by right to the other owner(s).
• Joint Liability – remember that as joint tenants you share 100% ownership. That means that if one owner runs into trouble with their taxes or owes a lot of money in litigation, the house as a whole may be put at risk.
• Diverging Interests – naturally different people will have different interests. If you want to own a home as a tenant in common there will often have to be cooperation and agreement between all owners for everything from when to do renovations to when to sell. This can cause unnecessary complexity. For example, if you want to sell and the other owners don’t, then you’d have to find a buyer who is willing to share ownership with the others already on title.

Thinking about purchasing a property and not sure which form of ownership works best for you? Consider using our free Legal Referral Service to talk to a real estate lawyer near you.

DISCLAIMER: articles posted in this blog are for informational purposes only. It may not be up-to-date, is not intended to serve as a comprehensive treatment of the topic, and may not be accurate. It shall not be construed as legal advice. No solicitor-client relationship is established from accessing this website and/or webpage. Nothing replaces retaining a qualified, competent lawyer or other legal professional, well versed in this area of the law to provide you legal advice.