Thursday, May 9, 2013

Joint tenants? Tenants in common? Too many names on the title causes confusion

A reader recently wrote to me to ask about the title to her home. As the topic of joint tenancy vs. tenancy in common is one that I constantly receive questions about, and one that affects all of us, I thought I'd share her question and my answer below:

"How do I tell if I have joint tenancy or tenancy-in-common? My mother-in-law, my husband and I own the land and I thought we had joint tenancy. Nowhere on the title does it say tenants-in-common. She added her new husband to her undivided 1/3 and now they have both passed away and there is confusion."

I'm not surprised there is confusion; that is way too may names to have on the title to one property. People just don't realize that it may be very easy to add a name to a title, but it's rarely easy to unwind it all when the time comes. Adding a name to a title creates legal rights that require a legal process to deal with later.

You don't hold this property in joint tenancy with  your mother-in-law. When you look at a title to a property and you see the words "undivided share", you know that it's held as tenants-in-common.

To understand why I say that, you need to understand the nature of joint tenancy and of tenancy-in-common. Though the vast majority of people will refer to "two names on a title" or "three names on a title", few really understand what those two people or three people actually own.

In a joint tenancy there is a right of survivorship. If three people own a property in joint tenancy they each own the whole property. There are no thirds. This is the part that people find hard to understand. If they sold the property while they are all still alive, sure, they would split the proceeds equally. But with a right of survivorship, the death of one of the three owners means that now there are two owners who both still own the whole thing. There is no third going into the deceased's person's estate. There is no third to be sold. It's a last man standing concept.

Tenancy-in-common is also an arrangement of two or three (or more) names on a title, but the ownership arrangement is very different. Each of the owners has a defined share. It could be halves, or thirds. One could own 80% and each of the others 10%. It's a way of setting up the ownership so that each person has control of what happens to his or her share. If a tenant-in-common dies, his or her share is transferred according to his or her will.

So, with this knowledge in hand, it's clear that your mother-in-law was not a joint tenant with you and your husband. It's possible that you and your husband own 2/3 of the property as joint tenants, but I don't  have the facts available to assess that.

You say that your mother-in-law "added her new husband" to her share of the title. Again, I can't tell for sure whether she added him as a joint owner or a tenant-in-common as you didn't provide that information. However, you didn't say they each now have 1/6, so let's assume she added him as a joint tenant to her 1/3.

If their 1/3 was held in joint tenancy, and one of them died, the survivor of them would own the 1/3. When the second one of them died, the 1/3 becomes part of his or her estate. It will be transferred to the estate beneficiaries under their will. If it's the new husband's will (that is, if he died later than she did), the other person or people on title might not even be someone you know. Hopefully it won't be a situation in which the share of the house is the only asset in the estate and must be sold to pay estate expenses. You might find yourselves buying one-third of your own house from the estate.

I see this kind of mess all the time when administering estates, and I'll never understand why people think it's a good idea to make big changes to their largest asset without legal advice. The loss of property, the cost of unwinding it all, and the upset to family members is enormous.

3 comments:

  1. Very informative article Lynne!

    One question: Is it possible to change the title from "joint tenants" to "tenants in common" or vice versa without incurring taxes and/or fees?

    Thanks!

    ReplyDelete
  2. Where can one obtain a copy of the property title. I am presently abroad and would like to check if I own a property with a friend as joint tenant or a tennant in common
    Thank you Sheila

    ReplyDelete
    Replies
    1. Sheila, each province has its own land titles office or registry at which you can request a copy of a title for a very small fee. Since you are not able to visit them in person right now, you can look them up online.

      Lynne

      Delete

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