Understanding Joint Tenancy: What You Need to Know About the Right of Survivorship

If you own property with someone else or are considering it, understanding joint tenancy is crucial. Joint tenancy is a type of property ownership where two or more people own a property together. Unlike other forms of ownership, joint tenancy comes with unique rules and benefits that can make managing and transferring property much easier. However, registering someone on title as a “joint tenant” without understanding all the implications, may also create more complications or even legal disputes.

One of the key features of joint tenancy is the right of survivorship. This means that if one of the owners dies, their share of the property automatically goes to the surviving owner(s). This can simplify the process of inheritance and avoid lengthy legal battles. However, it's important to know all the details before deciding if joint tenancy is right for you.

In this article, we'll break down what joint tenancy is, explain the right of survivorship, and discuss its benefits and drawbacks. We'll also cover important legal considerations to help you make informed decisions about your property. Whether you're buying your first home or planning your estate, getting familiar with joint tenancy can save you time and trouble in the long run.

What is Joint Tenancy?

Joint tenancy is a type of property co-ownership where two or more people own a property together in equal shares. Each owner has the same rights to the property, and they share equal responsibility for it. Joint tenancy is unique because it requires all owners to take possession of the property at the same time and under the same title deed, which ensures equal ownership from the start.

This form of ownership differs from other types, like tenancy in common or sole ownership:

• Tenancy in Common: Owners can hold unequal shares, and there is no right of survivorship. This means each owner can sell or transfer their share independently, and if an owner dies, their share goes to their heirs as per their Last Will and Testament.
• Sole Ownership: One person owns the entire property outright, with no shared rights or responsibilities.

Joint tenancy is beneficial because it simplifies property management and transfer. However, it requires a strong level of trust and cooperation among the co-owners, as decisions about the property must be made together.

Understanding the Right of Survivorship

The right of survivorship is a key feature of joint tenancy. It means that when one of the joint tenants passes away, their share of the property automatically transfers to the surviving owners. This process happens without the need for probate, which can be time-consuming and costly.

The significance of the right of survivorship is that it ensures a smooth and immediate transfer of property ownership. This feature can be especially beneficial for families or close partners who wish to ensure that the property remains with the surviving co-owners without legal delays.

However, there are important exceptions to consider:

• According to the common-law doctrine of resulting trust, unless the co-owners are spouses or have a document proving their intention to register their shares in joint tenancy, the right of survivorship may be reversed to tenancy in common. In such cases, the share would go through the deceased's estate instead of passing automatically to the other survivor(s).

When it comes to inheritance, the right of survivorship overrides any provisions in a Will regarding the deceased's share of the property. For example, if a joint tenant has children or other heirs, they will not inherit the property share if the right of survivorship is in effect. Instead, the property will fully belong to the surviving joint tenants.

To prevent misunderstandings, additional documents such as a Co-Ownership Agreement, Bare Trust Agreement, or Deed of Gift may be necessary to confirm the intentions of all parties involved.

Key Benefits and Drawbacks of Joint Tenancy

Benefits of Joint Tenancy

1. Ease of Transfer: When a joint tenant dies, their share automatically transfers to the surviving owner(s), bypassing the need for probate.
2. Shared Responsibility: All joint tenants share equal responsibility for the property, including maintenance and expenses.
3. Avoiding Litigation: The clear rules of joint tenancy can help avoid potential disputes among heirs or other family members.
4. Credit Protection: In some cases, joint tenants may have some protection against the other's creditors if the property is held correctly.

Drawbacks of Joint Tenancy

1. Lack of Control: Each co-owner must agree on any decisions regarding the property, which can be challenging.
2. Exposure to Risk: Financial troubles or legal issues faced by one joint tenant can affect the entire property.
3. Overrides Wills: The right of survivorship means the property does not pass through the Will, potentially causing issues for heirs who are not joint tenants.
4. Inflexibility: Terminating joint tenancy may require legal action.

Understanding these pros and cons can help you decide if joint tenancy suits your situation.

Important Considerations and Legal Implications

Entering into a joint tenancy requires careful thought. Here are some key points to consider:

Before Forming a Joint Tenancy:

1. Seek Legal Advice: Consulting a legal expert before forming a joint tenancy can help ensure it aligns with your estate planning goals.
2. Clear Agreement: Make sure all parties understand and agree on the terms, including what happens if one tenant wants to sell or leave. If necessary, create separate documents that confirm all the parties’ intentions.
3. Documentation: Ensure all co-ownership details are well-documented and legally sound.

Maintaining a Joint Tenancy:

1. Regular Reviews: Periodically review and update your joint tenancy agreement to reflect any changes in relationships or financial status.
2. Communication: Keep open lines of communication among all joint tenants to avoid misunderstandings.
3. Exit Plan: Have a plan in place for what happens if someone wants to leave the joint tenancy or if conflicts arise.

Terminating Joint Tenancy:

1. Legal Steps: Changing from joint tenancy to sole ownership or tenancy in common usually requires a legal process, so consult a lawyer or notary public.
2. Mutual Consent: If possible, get all joint tenants to agree on the change to avoid complications.
3. Impact on Estate Plans: Understand how terminating the joint tenancy will impact your overall estate plan and inheritance goals.

Paying attention to these considerations can minimize risks and ensure that your property ownership remains smooth and legally compliant.

Understanding joint tenancy and the right of survivorship is crucial for anyone looking to co-own property. This form of ownership offers benefits like easy transfer of property and shared responsibilities, but it also comes with drawbacks such as lack of control and potential legal complications. Knowing the key benefits, risks, and legal implications helps make an informed decision, whether you are entering into a joint tenancy or considering terminating one.

Joint tenancy can be a powerful tool for estate planning, but requires careful planning and agreement among all parties involved. Regular reviews and open communication can help maintain a harmonious ownership experience.

For personalized legal advice and assistance with creating or managing a joint tenancy, contact Lilian Cazacu, our notary in Langley and Aldergrove. We can help you navigate the complexities of property co-ownership and ensure that your estate planning needs are met. Visit our website or call us today at 604-427-4279 to get started.