Jointly-Owned Property

A “joint tenancy” and a “tenancy in common” are the two primary forms by which two or more individuals can hold title to property in common-law jurisdictions (including all provinces other than Quebec). Registering property in either fashion has certain financial and estate planning implications.

Under a joint tenancy, the owners hold the property as a unified whole, each owning an undivided interest in the whole property. If a joint tenant were to pass away, his or her interest in the property would automatically transfer to the surviving joint tenant(s). It should be noted that even though ownership passes automatically, the estate of the deceased tenant is still responsible for any income tax implications arising because of the deemed disposition of property that occurs at death.

Under a tenancy in common, the owners each own a separate and distinct interest in the property. Subject to any co-tenancy agreement, a single owner can deal with his or her interest in the property without any restrictions from the other tenant(s) in common. For instance, a tenant could sell the interest, or perhaps secure a mortgage with his or her unique interest. Upon the death of one of the tenants in common, his or her interest would become part of the estate and be administrated as per the instructions in his or her will.

While the general rule is that jointly-held property passes to the surviving joint tenant, there can be exceptions to the rule.

In the case of Hansen Estate v. Hansen, the succession of jointly-held property was successfully challenged in the Ontario Court of Appeal. Barbara Hansen and her deceased husband Willy held title to their matrimonial home in joint tenancy. They were in the process of separating and dividing up their family assets when Mr. Hansen passed away. Mrs. Hansen claimed title to the matrimonial home, and two of Mr. Hansen’s children from a previous marriage (also the trustees of Mr. Hansen’s estate) claimed that joint tenancy was severed before Mr. Hansen’s death, and that the property was held after that time by the Hansens as tenants in common. This would mean that Mr. Hansen’s half of the matrimonial home would fall into his estate and be divided among his four children, as specified in his will.

The children’s application was dismissed by the judge on the basis of the fact that the joint tenancy between Mr. and Mrs. Hansen had not been legally severed prior to Mr. Hansen’s passing.

However, the Court of Appeal allowed the appeal, finding that the lower court judge had misapplied the test for determining whether a severance of joint tenancy had been implemented, and decided in the children’s favour.

The test for establishing whether a joint tenancy has been severed can be found in Williams v. Hensman, a case that was decided in 1861. The case established three rules, any of which would sever a joint tenancy:

  1. Unilaterally acting on one’s own share, such as selling or encumbering it,
  2. A mutual agreement between the co-owners to sever the joint tenancy, or
  3. Any course of dealing sufficient to intimate that the interests of all were mutually treated as constituting a tenancy in common.

The Hansen situation did not fall within rule #1 or rule #2 because Mr. Hansen had not acted independently from Mrs. Hansen in dealing with the property, nor had he been able to complete the legal transfer of title from joint tenancy to tenants in common before his passing. The judge noted that rule # 3 is dependent on facts specific to a situation, and is intended to ensure a right of survivorship does not operate unfairly to favour one owner where conduct would indicate a common intention to no longer treat respective shares in the property as an undivided, unified whole.

The Court of Appeal found that rule #3 applied in this case because of the facts of the situation. Included in the analysis was the fact that Mrs. Hansen had taken steps to value her half-interest in the matrimonial home, and Mr. Hansen had rewritten his will, taking into account the expected right to bequeath his halfinterest in the matrimonial home. While the court was able to recast the situation to what had been intended by the deceased, it is good advice for separating couples not to delay any changes to registrations of title to the matrimonial home.

E.O. & E.


This commentary is published by the Institute in consultation with an editorial board comprised of recognized authorities in the fields of law, life insurance and estate administration.

The Institute is the professional organization that administers and promotes the CLU and the CHS designations in Canada.

The articles and comments are not intended to provide legal, accounting or other device in individual circumstances. Seek professional assistance before acting upon information included in this publication.

Advocis*, the Institute for advanced financial education.

(The Institue”), CLU, CHS, FHF.C and APA are trademarks of the financial advisors Association of Canada (TFAAC).

The institute is a wholly-owned subsidiary of Advocis. Copywrite TFAAC. All rights reserved. Unauthorized reproduction of any images or content without permission is prohibited.

Copywrite  ISSN 0382-7038

Contributors to this edition:

James W. Kraft, cpa, ca, mtax, tep, cfp, clu, ch.f.c.
Deborah Kraft, mtax, tep, cfp, clu, ch.f.c.

About The Author

Mark Schneider
Mark Schneider is one of Canada's leading Chartered Financial Planners. For over 30 years he has helped hundreds of regular Canadian families grow small fortunes through consistent planning and wise advice. He holds the following designations: CFP, CLU, CHFC, CFSB

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