What are Tenants in Common in Canada?
An in-depth look at the definition of tenants in common and its key aspects.
Tenants in common is a form of property ownership where two or more parties hold an undivided share in real estate. Each owner possesses a distinct title for their portion, allowing for the property to be owned in unequal shares. Ownership percentages can vary, providing flexibility in the allocation of property interests.
Ownership Shares
In a tenancy in common, ownership shares can differ in size among the co-owners. This allows each tenant to own a specific percentage of the property. For instance, one individual may own 70% of the property while another owns 30%. Despite differing ownership percentages, all tenants in common possess equal rights to use and occupy the entire property. This is a fundamental characteristic, as it allows any tenant to use all parts of the property, irrespective of their ownership percentage.
Lack of Right of Survivorship
Tenancy in common does not include a right of survivorship. Upon the death of a tenant, their share does not automatically transfer to the surviving co-tenants. Instead, it becomes part of the deceased’s estate and is distributed according to their last will, or if no will exists, through the legal process of intestacy. This characteristic differentiates tenancy in common from joint tenancy, which facilitates the automatic transition of ownership rights to surviving owners.
Transfer and Conveyance
One key aspect of tenancy in common is the ability to transfer or sell an ownership interest without requiring the consent of the other co-owners. Owners can freely sell, transfer, or bequeath their shares during their lifetime or through a will. This independent management of shares allows for personalized estate planning and financial management. Additionally, such autonomy in managing ownership interests enhances flexibility in dealing with personal and financial circumstances.
Creation of Tenancy in Common
Formulating a tenancy in common requires specific language in the property deed or title, explicitly indicating the intention to create this form of ownership. If the deed lacks clarity on the type of tenancy, it is generally presumed to be a tenancy in common. This presumption serves to uphold flexibility and personal discretion in property ownership arrangements.
Use Cases
Tenancy in common frequently serves various ownership circumstances involving two or more people. It is commonly used when non-family members purchase property together, enabling them to have specific shares tailored to their financial contributions. Additionally, this form of ownership benefits spouses with children from previous relationships, as it permits each spouse to designate specific heirs for their respective property interests, ensuring personalized inheritance arrangements.
Probate Implications
Upon the death of a tenant in common, their share undergoes the probate process as part of their estate. This contrasts with joint tenancy, where shares are not subject to probate due to the right of survivorship. In the context of tenancy in common, the absence of automatic transfer to surviving co-tenants necessitates probate proceedings to allocate the deceased’s property interest as instructed by their will or legal guidelines of intestacy.
Property Taxation and Liability
In most jurisdictions, property taxes associated with tenancy in common are not proportionately divided based on ownership percentages. Instead, a single property tax billing is issued, and each tenant may bear joint and several liabilities for the entirety of the tax assessment. This stipulation implies that should one tenant neglect their tax responsibilities, others may be accountable for covering the tax payments.
Dissolution of Tenancy in Common
Tenancy in common can be dissolved under different circumstances, including voluntary agreement among co-owners, court-ordered partition, or partition by sale. A partition in kind physically divides the property, granting each tenant an individual piece according to their ownership share. Alternatively, a partition by sale involves selling the property entirely and distributing the proceeds among the owners according to their shares.
Legal Considerations
Legal considerations surrounding tenancy in common can encompass various terms and conditions, often detailed in the property’s deed or a separate contractual agreement among the owners. These stipulations clarify each tenant’s rights and responsibilities, serving to prevent common disputes. Legal provisions may address aspects such as property usage, maintenance responsibilities, and resolution of disagreements among owners. These considerations aim to uphold equitable co-ownership and ensure transparent dealings among tenants.