Many couples who purchase real estate together in Alberta place themselves on title for the property as Joint Tenants. However, at the end of a relationship, the benefits to be had from a joint tenancy may instead become potentially prejudicial to the parties and need to be reviewed.
In Alberta, as in many other jurisdictions, there are three major types of land ownership:
- Sole Ownership: where a single person or entity holds the entirety of the legal title for the property;
- Joint Tenancy: Where two or more people share title to the property; in the event that one of those persons dies, their share of ownership in the land automatically transfers to the other persons on title. In Joint Tenancy, the parties all own equal shares of the property; and
- Tenancy in Common: Where two or more people share title to the property; in the event that one of those persons dies, their share of ownership in the land transfers to the beneficiaries of their estate. In Tenancy in Common situations, the parties may each own different percentage shares of the property.
Couples often choose Joint Tenancy for the purposes of estate planning. In the event of the death of one party, as the title will automatically transfer over to the remaining party, there is no need for probate or any issues in respect of the transfer of title.
However, when a relationship breaks down, either or both of the parties may no longer wish their share of the title to transfer to their ex-partner, in the event of their own death. They may instead wish to have their share of ownership in the property to be transferred to a third party, via a bequest through their Will. However, if a party fails to sever the Joint Tenancy and convert it to a Tenancy in Common before they pass away, any wish they might have had for the transfer of the share of their property will be foregone and their share of the title will automatically transfer to their ex-partner.
Additionally, with the continual increase in real estate prices, many couples are relying upon their parents or other family members to help them purchase property. As a result, it is common that the parents of one person in a couple will also be placed on title. It is important for couples to realize that if they enter into such ownership as a Joint Tenancy, should the parents of that party pass away, the share of ownership held by the parents will be equally split between the two persons in the relationship, and not just to that child of the parents.
For example if Blake and Julie purchase a property with the help of Julie’s mother, and they are all on title as Joint Tenants, if Julie’s mother passes away, her share will not go to Julie, it will be equally split between both Julie and Blake. If it was the mother’s intention to transfer her share of ownership to Julie upon her death, such intention would be lost to the operation of the Joint Tenancy.
It is for the above reasons that parties, and any other persons intending to assist parties with property purchases, need to know their rights and have full information as to the difference between Joint Tenancy and Tenancy in Common before entering into joint ownership of property.
It is also equally important that parties experiencing a breakdown in their relationship take steps to sever any Joint Tenancy that they may be in with their soon to be ex-partner, in order to protect their estate.