There are many ways two people can own a property together in Nova Scotia. Two of the main options to own a property with other people is through joint tenancy and tenants in common. Both options allow individuals to have a share of the entire property. This means that certain areas of the property are not owned by one homeowner but are shared as a whole. While tenants in common and joint tenants are similar, there are some key differences to the two.
What is Joint Tenancy?
Joint tenancy is the most common types of ownership among families and couples. Joint tenants have equal shares of the property. This means for two joint tenants ownership is split 50/50, while three joint tenants, it will be split into thirds. Joint tenancy cannot be split unevenly among homeowners. For example, where one owner has a 25% share and the other has a 75% share.
They must also take the title of a property with the same deed at the same time. Joint tenancy also comes with a right of survivorship. This mean if one joint tenant passes away, their portion of the property is divided among the surviving joint tenants. When there’s only one joint tenant left, they will own the entire property themselves. A joint tenancy can be broken if a tenant decides to sell or transfer their portion to another person. This will change the ownership agreement from a joint tenancy to a tenancy in common.
What are Tenants in Common?
Tenants in common has a couple key differences to joint tenancy. Tenants in common allows owners to choose how much of the property they would like to own. They can split the property so that each person has an equal share, or they can choose to split it a different way with each owner having a different percentage. A tenancy in common is created by a deed and tenants don’t have to be signed on at the same time. So, an individual can obtain a share of the property years after other owners have already entered into a tenancy in common ownership.
Unlike joint tenancy, tenants in common don’t have rights of survivorship. When a tenant passes away, their interest belongs to the estate unless they have specified otherwise in their will. Tenants in common are able to sell or mortgage their ownership of the property without the consent of the other tenants.
Which makes more sense?
Partners may prefer tenancy in common over joint tenancy for a couple different reasons. A person may be entering into an investment with individuals they aren’t related to. They may not want them to automatically inherit their share of the property upon their death, so tenants in common would be preferred. Another reason is if owners were putting in uneven amounts of money into the property. A tenancy in common would highlight those different contributions. Furthermore, if an owner has been formerly married, has children from a previous marriage, or has remarried, they may want to indicate a portion of the property goes to the children jointly or independently. A tenancy in common is the only way this can be dealt with since the interest would be deemed to be an asset of a person’s estate.
Married couples that own property are affected by the Matrimonial Property Act. This applies to married couples and will affect properties that are owned before or during their marriage. When married couples separate, the couple can apply to the court for them to divide properties, pensions, and debts. Usually once they’ve been divided, the case can’t be re-opened in the future. We will discuss this a bit further in another blog post.
If you’re looking to own a property with other people, stop on in to Clinton Wilkins Mortgage Team or get in touch with us here. We can help find which option is best for everyone involved!