When you purchase property with another person, or persons, you will need to decide how you will be registered on title. Obviously, it will be important to make sure that your name is spelled correctly and that your interest, whether that be 50% or otherwise, is correctly noted.
Equally important, but not often previously considered, is whether you want to be registered as Joint Tenants or Tenants in Common. Just so we’re clear, the word “Tenants” in this case has nothing to do with where one lives. This often confuses people when we ask.
When your Notary or Lawyer asks you whether you would like to be Joint Tenants or Tenants in Common, you are essentially being asked what you would like to happen to your share of the property should you pass away.
Registering as Joint Tenants will mean that upon your death your interest in the property will pass directly to the surviving owner(s). This is typically the way that spouses would be registered on title. The idea being that if one of them passes away, the surviving spouse ends up owning the whole property without having to rely on the contents of a Will and having the courts involved (Probate / Letters of Administration). Joint Tenants must have equal interests in the property. Being registered as Joint Tenants will result in the simplest and least expensive process should you pass away. This is provided that it is the right arrangement for your situation. If it ends up being the wrong choice, it can result in a dispute and end up being anything but simple and inexpensive.
Tenants in Common is an arrangement where the interest of the deceased owner passes to their own estate rather than directly to the other owner(s). We see this in situations where business partners buy property together but want to make sure that their interest in the property goes to their respective families, rather than to their business partner. Another scenario in which one may choose Tenants in Common is in a 2nd marriage situation where each partner has children from a previous relationship. Instead of giving their share to their spouse, they may want to make sure that their share of the house goes to their own children. While this will result in a more time consuming and expensive process, it allows the deceased to pre-determine specifically how their share of the property is distributed.
What seems like a relatively simple question can often require considerable thought and planning. If you have any questions about this topic or a general inquiry, please don’t hesitate to contact us at Simpson Notaries.