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)!
Hi Lynne,
DeleteIf two people are on title under a joint tenancy agreement can one of the parties sever the joint tenancy agreement and change it to joint tenants in common and then sell their 50% share of the property?
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
I my mom gives me money to buy a house with my dad. If my marriage dissolves can my husband claim 1/4 (1/2 of my 1/2) of the house. If so, and if I can't buy him out, can he force a sale and force my dad to move out?
ReplyDeleteIs there anyway to prevent that, ie my mom "gifts" the money or loans the money to me?
Thanks
Did you ever get the answer to your question? I have a similar issue and am not sure what the outcome would be.
DeleteMy ex husband and I own a house that we were never married in. When we separated, we bought a duplex so our daughter could still have us both close by (for an adjustment period). I no longer live there, but he does and says he want to buy me out. We had agreed to put the house on the market months ago, but he is now stalling.
ReplyDeleteWe never had a legal separation agreement in place, but we are now legally divorced.
Can I force a sale on this property?
Hi. I appreciate your comment but this isn't an estate planning question, and really not areas of law that I work in. You'd be much better off asking a lawyer who works in real estate or family law.
DeleteLynne
Hi Lynne, If two people, brother and sister each own "half" a house, can one of them will his half to his wife if he dies, or does the house go to the surviving person? Like in the last man standing mentioned in the article. This is in the US. Thanks
ReplyDeleteAs a Canadian lawyer, I'm trained in Canadian law, and it would be pretty foolish of me to speculate as to how other countries' laws work. If the situation you describe were in Canada, and the property was held as tenants in common (not joint with right of survivorship) then the half could be willed to the spouse.
DeleteLynne
Hi Lynne:
ReplyDeleteI have been reading your blog for a while and have found it very informative. I have a question, my mother in law purchased a house for my husband and I last year. It was put in our 3 names, as joint tenancy with right of survivorship. My MIL just passed away, and my husband's siblings have now drawn us into a law suit to try to get the house put into the estate. My question is, being only the Daughter in law, and if for some reason this house can be drawn into the estate, do I have any rights to 1/3 of the home because I am not a direct sibling? I don't know if this makes any sense. ??
Hi Lynne:
ReplyDeleteI will try to keep my question short. My husband and I own a house (rental property)with another couple. All four of us are on title. We have no partnership agreement. For 5 years, my husband and I have wanted out of this agreement, but the other 2 owners refuse to buy us out or agree to sell. Are we legally able to sell our "half" or is there a way to force the sale if they won't comply? Can they continue hold us hostage? And if so, are we within our rights to refuse/evict a tenant - as leverage?
This is not an estate planning question. You would be better off asking a lawyer who practices real estate law.
DeleteLynne
Hi: Lynne:
ReplyDeleteMy wife and I have a joint mortgage on our home. We have been planning for some months to sell the house to our son. Recently my wife had a major stroke and cannot speak very well and is unable to make decisions for herself, financial or otherwise. The house is a three level townhouse and due to her disability she will not be able to live there anymore. How do I go about selling the house so that I can find a place for us that will accommodate her disability? How will the joint mortgage effect my ability to sell the house while she is in this condition?
It's not the mortgage you have to deal with, but the title to the house. I assume that you and your wife also have joint ownership, as that is normally the case with a joint mortgage.
DeleteAs she is unable to make her own decisions now, someone with proper legal authority will have to sign papers for her.
Did your wife prepare an Enduring Power of Attorney before her stroke? If so, this may allow the person named as her representative to act on her behalf. Even with a power of attorney, the sale of the family home is not always automatically allowed.
If she has not prepared a power of attorney, you may have to approach the courts to be appointed as a trustee for your wife.
If you would like to know more about how all of this works, you could check out my book called "Protect Your Elderly Parents", which talks about the roles and processes for adult guardians and trustees.
You should probably meet with a lawyer local to you to talk all of this over. Take a copy of the house deed or tax notice so that the lawyer can get an up to date title search and start from there.
Best of luck,
Lynne
Hi Lynne,
ReplyDeleteThanks for the article - great read! My sister and I jointly own a home, and I would like to removed from the title so my sister is the sole owner. We get along great and have come to an arrangement between the two of us. We are meeting with the lawyer to sign the papers on Wednesday and the lawyer is insisting she has to pay land transfer tax, even though we paid it the first time we bought the house. If she truly owns 100% (not half), then I am of the belief removing my name from the title would not incur additional taxes to my sister. Could you please advise me on this matter? When one is removed from the title, does the other have to pay land transfer tax (in Ontario)?
Thank you very much for your expertise.
Sincerely,
Andrea
Land transfer tax is not the same as capital gains tax. Capital gains tax is assessed against the increase in value of the property during the time it was owned. An owner does not pay capital gains tax when he or she sells their own principal residence.
DeleteHowever, land transfer tax is a tax on the actual movement of property. It's payable against every transaction. Think of it as a user fee and it might make more sense.
Understand that "removing one from the title" is actually cancelling out one title and creating a new one with different names. It's a transfer of title and is therefore subject to the fee.
Lynne
Thank you very much for the clarification Lynne.
ReplyDelete-Andrea
Thanks for an very informative article! My husband and I will have to chat about our will again.
ReplyDeleteMy question is this:
My sister and I co-own a condo in Toronto, that she had been living in for the past 10 years. I live in another house. Now, we are thinking of selling off the condo. It is very clear that since it's my sister's primary residence, she doesn't get taxed on capital gains. However, will I get taxed?
My father, aunt and grandmother are on title of her property as joint tenants. My grandmother wants to sell the property to my cousin for $200K below market value. My father is refusing to sell for this value. What will happen to the property?. Also, if he was to pass before my grandmother, I know because of the way it's registered his share reverts back to my aunt and grandmother, will registering a deed help this?
ReplyDeleteI bought a house with my parents in CALGARY- each of us are named on the title.The purchase price was $102,000.00. For the first 10 yrs I lived in the house with them. The house is paid for. My portion of the purchase price was 34,000.00. The value of the house has appreciated since purchase, now worth $400,000.00. I would like to sell the house and receive my 1/3 share. My parents have offered me $50,000.00 total. Telling me that when they die I will also receive a quarter share of the house. I am of the belief that I am entitled to at least one third share of the current market value of the house and if they die the house becomes mine?
ReplyDeleteLynne I have a question regarding real property. My father owned two houses. One was his principal residence and a second income property. I inherited his principal residence while my brother inherited the latter. It happened to be vacant at the time of death. My brother plans to put his house on the market but I am unable because the principal resident contains all the personal property including some of my brother's possessions. What are my responsibilities regarding providing access to my sibling?
ReplyDeleteThe answer depends partly on the wording of the will. What did it say about dividing the personal possessions? If it said nothing, then you must assume that the personal possessions are part of the residue of the estate and belong to all of the residuary beneficiaries. I can't tell from your question whether you and your brother were residuary beneficiaries or not.
DeleteThe answer will also depend in part on who is the executor of the estate. It is the executor who is responsible for dealing with personal possessions of the estate. The executor should have cleared all personal possessions out of the property before transferring the property to you (other than those you were to inherit, of course). Since he or she did not do that, it would be co-operative of you to allow access to the executor at a time that suits you only for the purpose of removing those articles. If your sibling is not the executor, you do not have to grant him access at all, though I expect you would want to if he showed up to collect his stuff.
If he doesn't make an effort to remove his goods from your house, you could consider giving him a deadline in writing for doing so. It doesn't have to be nasty; you just have to say that you need to get on with things and that if he doesn't pick up his belongings you will assume he doesn't want them. Provide a realistic opportunity, as you do not want to be accused of theft of his items.
Lynne
Thank you Lynne for your prompt reply. We are co-executors neither of which live in the city. Definitely I do not recommed naming co-executors.
DeleteI tend to agree with you about making siblings co-executors. Parents do it because they think it's fair to all the kids. It's actually more like punishing the kids, and I hope plenty of parents read your post.
DeleteLynne
Lynne your posts regarding hoarders has prompted me to as a question I have pondered for a while.
ReplyDeleteMy wife was Executor of her father's estate. When he fell ill his house could be considered comparable to those homes featured on the program Hoarders: Buried Alive. After he passed away we spent weeks cleaning up the house.
My father named National Bank (now Scotiabank) as Executor for his estate. My question is, how will they deal with clearing out his mess?
Hi Lynne,
DeleteI take it that the answer to question as to how Scotiabank would deal with cleaning out a hoarder's residence is not straightforward?
Sorry to take so long to reply; I get lost in the volume of questions sometimes.
DeleteThe Scotiatrust office in St. John's where I work dealt with a hoarder's home just last year. In talking with my fellow Scotiabankers across Canada, I find that it's more common than people might think.
All paperwork in the home has to be found and reviewed. This includes bank statements, bank books, loan statements, deeds, credit card bills, insurance policies, divorce documents and so on. We also have to locate identification cards such as the driver's license. This has to be done at every home we deal with, but with a hoarder, it may be done in stages as there is so much stuff in the house.
We read the will before disposing of anything. Sometimes a will leaves certain items to certain people, and we have to look for those items, such as jewelry.
If the will says that family members are to receive personal items, we arrange for them to meet us at the house to choose or collect those items. Again, in a hoarder's house that is not easy.
In order for the house to be sold or transferred, it has to be cleaned out. We would hire cleaners for a job that big. In the recent case I mentioned, we arranged for a disposal bin to be placed in the driveway while we dealt with the contents of the home. We made sure that we gave the beneficiary of the estate plenty of time to remove items that she wanted to keep.
In many homes, it's possible to hold a garage or estate sale to try to realize even a small amount of funds from the contents of the home. However, a hoarder's home is a special case because it's impossible for the home to be cleaned properly. There tend to be mice and possibly other stowaways. If there is a pet, it's even worse. Therefore, items that might otherwise have been sold must be disposed of because of their dirty condition.
We keep our eyes open for items that need to be appraised. We ascertain the value of artwork or jewelry in the home.
Lynne
Thank you Lynne. For some reason I thought you were in Alberta. I think my father attended one of your seminars in years past.
DeleteI spent most of my career in Alberta. I moved to NL (my home province) less than two years ago.
DeleteLynne
own an investment property with my ex wife, purchased when married. She got inv prop and I got principal res in divorce. I am selling my residence to release her from the debt, however she has refused to sell or refinance to release my name so I can buy a home with my new wife. As you can imagine this is causing huge issues for my new family, she says she still cannot qualify on her own and refuses yo sell. My question, as a joint owner can I force her to sell to release me from the debt so I can move forward. Furthermore she has been talking about bankruptcy which will ruin my credit, and has refused to sign mortgage renewal on my home increasing rate from 3% to 6%. I am unsure why she is doing this as we were only married 6 years snd gave no children. As an owner what are my legal rights to protect myself financially. I would like yo force the ssle so I can move on. There is no reason not to sell. And she has enforced my sale by not signing the renewal. I was not in a position to buy her out or have ger name removed when we divorced either, but agreed both properties would be liquidated as assets from divorce when we were both in a position to do so. What are my rights as an owner to liquidate, when the other owner cannot buy me out. It has been two years.
ReplyDeleteI'm guessing you two did your divorce without using a lawyer. Normally when someone "gets the house in the divorce" it is put into writing for the simple reason that all agreements relating to land must be in writing to be valid and enforceable. The agreement would also contain a clause that says that you each agree to sign all documentation necessary to give effect to the changes. This would give you a way to sue her if she refused to cooperate.
DeleteYou need to see a lawyer who specializes in divorce to help you sort this out. I don't do that kind of legal work, thank goodness.
Lynne
Dear Lynne,
ReplyDeleteI'm wondering if you could provide me with some real estate advice. My parents helped me and my brother with the down-payment of our current condo back in 2007. My brother, my sister in-law and I moved into the condo in March 2010.
My brother and I are tenants-in-common and the down-payment was a gift from our parents. But the two of us have been paying the mortgage.
Can you tell me what's the best way to divide the home? My brother doesn't want to sell it and I would prefer to remove my name off the deed so my sister in-law can take over. They both plan to continue living there after I leave. How do we determine the value of the home so I can sell my half to them?
Thank you kindly.
Your situation is an example of why it's usually not a good idea to give a house to siblings together. It works well for a while, but eventually you have to deal with disposing of it.
DeleteIf you are a tenant in common, you can sell your half of the property, but realistically who do you sell it to? It seems you want to sell it to your brother or his wife, which makes perfect sense, but if they refuse to purchase it, you're really stuck.
The only really workable solution in your case seems to be your brother and his wife buying out your half so that they can own the whole property and continue to live there. This could mean them re-financing the mortgage to come up with the cash to buy you out.
To determine the value of the house, you only need to call a realtor - or two - to have them come in and take a look, To be as fair as possible, you might ask for two or three valuations, and average them out. Your share would of course be half of the value, less half of the mortgage.
Lynne
Dear Lynne,
ReplyDeleteI finally presented to my brother and my sister-in-law what I felt was "fair market value" of the condo based on two CMA's that were prepared by our realtor friends.
Unfortunately, after speaking to a mortgage specialist at the bank, they were told that they didn't qualify for the amount to buy me out.
Basically, I thought $450K was a fair number by averaging out the two CMA's (I believe after all the legal fees, etc., the net amount would be closer to $430K). Anyway, my brother and I still currently still owe about $180K and our mortgage doesn't mature until July 31, 2015.
Right now, my plans are to move out with my fiance in early October and rent a friend's place for a few months in hopes of finding and buying our own place within the next 10 months. I don't feel that it's fair that I continue paying expenses for our condo when I'm not living there but if I'm legally the owner, I'm still obligated to of course.
Could you tell me what our options are at this point? It's been quite frustrating because I'd like to get this done with asap but they are in absolute no hurry themselves.
I'm not sure what to do or who do discuss this with.
Thank you
Dear Lynne,
ReplyDeleteAbout 25 years ago, my fiancé entered into a Tenants in Common agreement with her 2 parents. She paid for 1/2 of the house & the mortgage was paid off. About 15 years ago, the deed was changed to a Joint Tenancy. Recently, her parents went to a lawyer & had the Joint Tenancy voided & reverted back to Tenants in Common, without her knowledge. The deed specifies that her parents jointly own 1/2 & she owns 1/2. My first question is, was it legal to void the Joint Tenancy without her knowledge?
We were recently married &, as I understand it, if she dies, her 1/2 ownership of the house goes to me. Please let me know if I'm not right.
Regardless, in order to avoid any future problems or questions, or any possible financial/tax situations, I'd like to have my name added to the deed as a Tenant in Common on her portion of the ownership. My question is, do all parties in a Tenants in Common agreement have to sign to add a name, or can my wife do that without her parents' signature?
I look forward to your reply.
Hi Lynn,
ReplyDeleteI have a question about tenants in common.
My wife purchased a house 10 years ago when she was quite young. In order to get a favorable mortgage, she had her parents assume 1% each of the ownership, while she took on 98% and all mortgage payments. We are now trying to sell the house and purchase another property. However, they do not like where we are moving and have refused to sign the paperwork.
Can they block the sale of the house? Or is there any other way to deal with this issue without taking them to court?
Thanks
To help our newly married daughter afford a place to live in this really expensive city (Vancouver), we are considering selling her and her husband 1/10 ownership in our house (that's what she and her husband can afford). They currently live in a separate suite in the house. If we own the property together as "tenants in common" what are the implications of this for estate planning (capital gains etc.) We're trying to be creative to help them build equity, but do not want a joint ownership situation. We have not consulted a lawyer about the legal ramifications yet.
ReplyDelete