Tenancy-in-common does not carry an automatic right of survivorship as in joint tenancy. In other words, if one of the tenants-in-common dies, the interest does not go to the other tenants, but goes to the estate of the deceased. If there is a will, it is distributed under the terms of the will. If the deceased person does not have a will, there is provincial legislation dealing with that type of situation, and the person’s assets, which would include the tenancy interest, would be distributed to relatives according to the legislation.
There are various reasons why some people prefer tenancy-in-common to joint tenancy. For example, if you are purchasing property with people who are not relatives, you would not want them to automatically have your interest in the property in the event of your death. Another reason why people prefer a tenancy-in-common is that if they have been previously married and they have children from a previous relationship, they may want to specify in their will that a certain portion of the worth of the estate goes to those children individually or collectively. The only way this can be dealt with is in a tenancy-in- common situation, because the interest would be deemed to be an asset of one’s estate. Another reason why people may prefer a tenancy-in-common is that they are putting unequal amounts of money into the property, and a tenancy-in-common structure would reflect those different contributions in terms of the percentage interest in the property.
Written agreements are frequently signed by tenants-in-common setting out the procedures if one of them wants out of the situation. This can be done by giving the others the first right of refusal on a proportional basis to buy out the interest; or there could be a clause requiring the consent of the other tenants-in-common in approving of a potential purchaser; or there could be a provision requiring a certain period of notice to the other tenants before the property is sold. Another case when tenancy-in-common night be preferable, would be when one of the owners of the property wishes to have the personal independence to raise money for other, outside interests, for example a business. The tenancy-in-common portion could be mortgaged without the consent of the other parties.
Joint Tenancy
This is a situation in which an owner has an undivided but equal share with all the other owners. No one person has a part of the property of which he can say it specifically is his or hers, because all the property belongs to all of the owners. At the time of purchase of the property, all the people who are joint tenants will show up on the title of the property equally and each of the joint tenants has the rights in law to possession of the whole property. These are the essential conditions involved in joint tenancy, and if any of these conditions are not met, then the ownership is deemed to be a tenancy-in-common and not joint tenancy. The title of the property will list all the parties’ names and will clearly state that they are joint tenants.
If it does not specifically state joint tenancy on the title, the situation is generally deemed to be tenancy-in-common. And you can easily terminate your joint tenancy relationship by simply mortgaging or selling your interest to one of the other joint tenants or to another party. For example, if there are three joint tenants, you would be selling or mortgaging one-third (1/3) of the property. The act of mortgaging or selling your interest immediately creates a tenancy-in-common in most cases.
