When two (or more) people own a property as joint tenants, there is a right of survivorship. This means that each of them owns the entire property, just as both would own every dollar in a joint bank account. There is no "half" in a jointly owned property. Each owns 100%. Therefore, there is no "half" to sell.
This seems to be a really tough concept for people. I'm constantly asked about this issue on my blog and at pretty much every seminar I present. One person argued with me for about ten minutes about the fact that if two people owned a house it HAD to be half and half. He had no legal reason to believe this, but that didn't stop him from being absolutely sure that he'd know this better than I would.
The whole idea behind a joint ownership is to leave the entire property to the other person when one dies. For example, if a husband and wife own their home jointly and one of them dies, the other still has the house. It's a "last man standing" concept. It doesn't really work for a number of siblings owning a house.
If two or more people want to own "halves" or "parts" of a house, they should hold that property as tenants in common. In that arrangement, each has a piece of the house that he or she can sell or leave to someone in their Will.
This brings me to the second point.
About 90% of the questions I get about how to get out of a joint tenancy come from people who own something with their siblings and the arrangement isn't working. It's almost always because a parent left the house to ALL of the children equally. Parents need to be realistic about the million or so ways this arrangement can go wrong. More than one child wants to live there, and nobody can agree. One moves in but won't move out and won't pay rent or expenses. The roof needs repairs but each wants the others to pay for it. One rents it out without the permission of the others. One causes damage and won't pay for repairs. Two want to sell but the third won't sign. And on and on and on.
Why wouldn't the parents choose one child to take the house as part of his share? Or direct that the house be sold and the proceeds split? This is truly something done without thought that leads to so many fights and headaches, I can't believe anyone does this anymore. Parents - please stop doing this to your kids!
Hello
ReplyDeleteI must say I find your blog very informative and helpful.
My question being, If a home is willed to multiple people (who are not on the title) for there (his/her) own use absolutely. What does this mean? What if the people don't see eye to eye? eg. One wants to live there and has no cash to pay out kinda thing. What happens then, what are the choices on how that is handled if any? And what happens with the original mortgage when no funds are available?
Sorry for all the questions, just looking for informative help.
Thank You.
Hi Jenny,
ReplyDeleteYour questions are not really estate-planning questions, but I'll give you my perspective on them. You asked what happens if the people who inherit the house don't see eye to eye. I can tell you that they almost never see eye to eye. This is why I ended my post by asking parents to stop doing this to their kids, as they are setting them up for problems.
Most likely the house will end up being sold and the money split, because trying to hold the title between the group is going to prove to be impossible. Not that selling it is going to be a piece of cake either; everyone is going to have to agree on the selling price and the date and other details. But selling it is really the only option, despite the fact that it will defeat the original purpose of keeping a property in the family.
Lynne
I need some advice on how to buy out a family members share of the family cottage. My Uncle owns 50%, Mother owns 25% and Aunt owns 25%. My Aunt wants to sell her share to the family and my Uncle and Mom cannot afford it. Can I buy her share and can she force us to buy out her share. Please let me know. Thank you
ReplyDeleteYour aunt can sell her share to whoever she wants to, and I don't see why that couldn't be you. I always cringe when I hear things like "sell to the family" because this almost never, ever works out as anyone wants it to. If you need any proof of this, read a few more posts to see what people are dealing with.
DeleteThe part of your question I don't really understand is the bit about her forcing you - whoever "us" refers to - to buy out her share. Nobody can be forced to buy anything.
If she really wants or needs to sell her share and nobody in the family is prepared to buy it, she can either sell it to someone else or hang onto it until someone in the family is in a position to buy it.
Lynne
What is the legal process when the joint tenant decided to take her name out of the property's title, that is, Title Transfer.
ReplyDeleteFor example: John Doe and Jane Doe are both registered as property owner but John Doe decided his name to be taken out of the title because he didn't want to be paying the mortgage, property taxes, etc.?
If John no longer wants to own his property, he has to transfer it to someone else either by sale or by gift. This involves preparing a form of Transfer of Land (they are different forms in different provinces) that John and whoever is receiving the property would sign and register at the Land Titles Office.
ReplyDeleteBefore going ahead, John should talk to his banker to see what happens to his mortgage if he transfers the property. He might also talk to an accountant about any tax consequences for himself or the recipient of the property.
Lynne
Hi Lynne,
ReplyDeleteHow would one party of a "joint tenancy" go about switching the title from joint tenancy to tenants-in-common?
Thanks,
A concerned child of an elderly parent (who signed a legal agreement that the parent wishes they hadn't)!
Lakefront Property is owned as tenants in common with 5 siblings each owning a 1/5 share, since 1977. One sibling had his share of the empty property bought for him by a parent and has NEVER paid one penny for anything - not a cent for the cabin that was built by the other 4 shareholders in 1985 or for anything else since, and has undiagnosed mental health issues (is a hoarder and hermit-type who has never held a steady job and is 60 years old). Both parents are now gone and two of the shareholders are buying out two of the older siblings but need to pursue avenues to have the brother's share who has never paid removed from the land title.
ReplyDeleteThe answer seems obvious to me. The brother "who never paid" needs to be bought out just like the other two. The fact that the source of his funds was his parents is not relevant to the fact that he is an equal owner just like everyone else. You can't just have him "removed from the land title" because you disapprove of him. I don't think this is the answer you wanted, but ownership of land carries rights.
DeleteLynne