Joint Tenancy vs. Tenancy in Common

When two or more people purchase property together in Ontario, they must decide how to hold title — as joint tenants or as tenants in common. This decision has significant legal consequences for what happens to each owner's interest on death, on separation, and if one owner wants to sell.

The choice is made in the transfer document registered in the Ontario land registry system. If the tenancy type is not specified in the transfer, the Conveyancing and Law of Property Act, R.S.O. 1990, c. C.34, Section 13 provides that the transfer creates a tenancy in common (not joint tenancy), unless the transfer expressly creates a joint tenancy.

In practice, most spouses and romantic couples purchasing together choose joint tenancy for estate planning simplicity. Business partners, investors, family members purchasing together, and parties in unmarried relationships often choose tenancy in common to preserve their specific shares in the property.

Joint tenancy is characterized by the 'four unities' — unity of time, title, interest, and possession:

• Unity of time: All joint tenants acquire their interest at the same time
• Unity of title: All joint tenants acquire their interest under the same instrument (deed or transfer)
• Unity of interest: All joint tenants hold equal interests (e.g., two joint tenants each hold a 50% interest — they cannot hold unequal shares in a joint tenancy)
• Unity of possession: All joint tenants have an equal right to possess the entire property

Right of survivorship: The defining characteristic of joint tenancy. When a joint tenant dies, their interest does not pass through their estate — it automatically passes to the surviving joint tenant(s) by operation of law. For a married couple who are joint tenants, the surviving spouse automatically owns 100% of the property on the other's death, without the need for a will, probate, or any registration in the land registry until they choose to update the title.

The right of survivorship overrides a will — even if a joint tenant's will attempts to leave their share to someone other than the surviving joint tenant, the right of survivorship prevails. This can be a significant estate planning concern in blended family situations.

Joint tenancy is most commonly used by married couples purchasing a matrimonial home.

In a tenancy in common, each co-owner holds a specified, undivided share of the property. Key features:

Unequal shares permitted: Tenants in common can hold different percentage interests — for example, 60%/40% or 33.33%/33.33%/33.33% for three owners. This reflects financial contributions where the parties have contributed different amounts.

No right of survivorship: When a tenant in common dies, their share passes through their estate — to whoever is named in their will, or to their next of kin under Ontario's Succession Law Reform Act if there is no will. The surviving co-owners do not automatically acquire the deceased's share.

Independent transferability: A tenant in common can sell, mortgage, or gift their share without the consent of the other co-owners (subject to any co-ownership agreement). This can result in an unwanted third party becoming a co-owner.

Right to partition: Any tenant in common can apply to a court under the Partition Act, R.S.O. 1990, c. P.4, for an order to partition the property (divide it physically) or to have the property sold and the proceeds divided. This means that any co-owner can force a sale of jointly owned property if the co-owners cannot agree.

Tenancy in common is commonly used by business partners, real estate investors purchasing together, parents and children purchasing together, and purchasers contributing unequal amounts.

A joint tenancy can be converted to a tenancy in common through a process called 'severance.' Once severed, the right of survivorship is destroyed and each former joint tenant holds as a tenant in common.

Under Ontario law (and the common law principles applied in Ontario), severance can occur by:

Transfer to a third party: If a joint tenant transfers their share to someone else, the joint tenancy is severed — the new owner and the remaining original joint tenants hold as tenants in common.

Transfer to oneself: A joint tenant can sever the joint tenancy by registering a transfer of their share to themselves. This is a common planning technique for estate planning purposes.

Course of dealing: Evidence that the parties intended to hold as tenants in common, even without a formal transfer, can sever a joint tenancy in some circumstances under the common law. This is fact-specific.

Mutual agreement: The joint tenants can agree in writing to hold as tenants in common.

Severance on marriage breakdown: Under Section 21(2) of the Family Law Act, R.S.O. 1990, c. F.3, the right of survivorship in a joint tenancy does not apply to a matrimonial home after a court issues an order for possession or equalization. This prevents a separating spouse from acquiring the matrimonial home solely through survivorship.

Severance of a joint tenancy is registered by updating the land registry record. The Ontario Land Registration Reform Act, R.S.O. 1990, c. L.4, governs the registration requirements.

Regardless of whether co-owners hold as joint tenants or tenants in common, it is strongly advisable to have a co-ownership agreement (sometimes called a co-habitation agreement, co-tenancy agreement, or property sharing agreement) that addresses:

Contribution and expenses: How mortgage payments, property taxes, insurance, and maintenance costs are shared.

Buyout rights: What happens if one co-owner wants to sell their interest — typically a right of first refusal for the other co-owners.

Decision-making: How decisions about improvements, renovations, or changes to the property are made.

Occupancy: If not all co-owners reside in the property, how is occupation managed or compensated?

Forced sale: Under what circumstances can either co-owner force a sale of the property?

Death: What happens to a co-owner's share on death (particularly important for tenants in common)?

Without a co-ownership agreement, disputes between tenants in common can result in Partition Act applications — court proceedings to force the sale of the property. These proceedings are expensive and disruptive. A well-drafted co-ownership agreement prevents these disputes by establishing clear rules in advance.

Scenario 1 — Married couple: David and Mira, a married couple, purchase their first home in Oakville. They choose joint tenancy. If David dies, Mira automatically becomes the sole owner without probate or estate administration — the property passes outside his estate. Their will does not need to address the matrimonial home. This is the estate planning simplicity most married couples want.

Scenario 2 — Business partners: Jameel and Sofia, unrelated friends, purchase an investment property together. Jameel contributes 60% of the down payment; Sofia contributes 40%. They choose tenancy in common with 60%/40% shares reflecting their contributions. They also sign a co-ownership agreement addressing their right of first refusal, expense sharing, and forced sale process. If Sofia dies, her 40% interest passes to her estate (her children) — not automatically to Jameel. Jameel retains his 60% and the right of first refusal to purchase Sofia's share from her estate at fair market value.

Scenario 3 — Parent and child: A parent adds their adult child to title as a joint tenant to avoid probate. This is a common but legally risky planning technique — the child becomes a full legal co-owner and the property is exposed to the child's creditors, divorce proceedings, and capital gains tax on eventual sale (since it is not the child's principal residence). Legal advice before implementing this structure is strongly recommended.