What is the difference between Joint Tenancy and Tenancy In Common?

Many clients are confused by their choice of ownership: joint tenancy or tenancy in common.  The key difference between these types is joint tenancy has the right of survivorship.

When a joint tenant dies, his or her share immediately passes to the remaining joint tenants.  This process continues with the subsequent deaths of the remaining co-owners until the last owner living is eventually left with the entire property.  Joint tenancy is a popular form of ownership between married couples and amongst parents and their children.

By contrast, when a tenant in common dies, his or her share passes to the beneficiaries in the deceased owner’s will.  Tenancy in common ownership is appropriate for most business partnerships.

Joint tenancy with its right of survivorship is useful for estate planning since it:

• avoids the delay and expense of probate

• assures the other joint tenants have priority ahead of any contrary distribution that may be indicated in a will

• protects the asset since the deceased owner’s creditors can only claim against property transferred via tenants in common

In order to create a joint tenancy each co-owner must have an equal share of the property and the words “joint tenants” must appear in the registration of title document (e.g., Jack Jones and Jill Smith, as Joint Tenants).  If buyers wish to have unequal interests (e.g.,  10% / 90% split) then tenancy in common is their only option. Without the express declaration that “joint tenancy” is intended, a tenancy in common is presumed.

How do I understand a Title Search?

The BC Land Title Office maintains a database with key information about all properties in British Columbia.  A Title Search report from this database shows who owns the property, provides a unique parcel identifier number and legal description, lists any registered financial charges, and lists any registered non-financial charges.

Financial charges include mortgages, liens, and court judgments that belong to the current owner.  As part of the conveyance process, the buyer’s notary will make sure that arrangements have been made to pay out and clear all financial charges so that the new owners do not inherit these legal obligations.

Non-financial charges include easements, rights-of-way, and restrictive covenants.  For example, an easement might permit a neighbour to run a drainage ditch through the property; a right of way might allow BC Hydro to enter on to a portion of the property to maintain their equipment; and a restrictive covenant could limit the size of home that can be built.  Since non-financial charges remain after the conveyance and can restrict a buyer’s use of the property it is recommended that details about each charge be obtained from the Land Title database and reviewed prior to subject removal.

Charges with a notation of “inter alia” apply to more than one property — this is common in strata developments where the charge is registered against each unit and applies to the entire complex.