In Ontario (aside from sole ownership) there are several ways you can choose for more than two individuals.
Two People on Title
When purchasing a home along with another buyer, there are two options on how to take title to the property on the registered transfer. The buyers can elect to take title either jointly or as tenants in common.
If the two people on title are registered as “jointly” and one of the two people passes away, that person’s share is entitled to be transferred to the other person through a simple registration called a Survivorship Application which removes the deceased person’s name from title. Most married couples will elect to take title jointly as they already want their spouse to have the full title to the property once they pass away. If the property is transferred by way of joint ownership, the property is not included in the value of the deceased’s estate for the purposes of paying estate administration tax.
If the two people on title are registered as “tenants in common” and one of the two people passes away, the deceased person’s share will be transferred to their estate and the deceased can name in their Will who will inherit their share of the property. The surviving person on title will still have their original share of the title and will be sharing the ownership with the new person named in the deceased’s Will. Acquaintances looking to invest in property together, some common law spouses and some couples who consider themselves dating but not common law will sometimes take title to the property as tenants in common because they would like to leave their share of their investment to a family member instead of the other owner on title.
Three or More Persons on Title
When there are three or more persons registered on title, there is an additional option beyond simply tenants in common or joint tenants. The parties can take title using a combination of the two methods. Therefore, there are three options when there are multiple buyers.
First, the parties could take title jointly among all the buyers. In the case of three buyers, each owner would have a 33% share of the property. If one owner passed away that person’s share would be equally shared among the two surviving owners.
Second, the owners could take title as tenants in common, and the same principles of tenants in common for two owners would apply to the three or more owners. They could designate the percentages they own between them and determine who would inherit their share in a Will.
The third option available when there are three or more people is a combination of the two types of registrations. Therefore, two of the people can hold title jointly between them, but those two people would share title as tenants in common with the third person. When two parents decide to take title to the property along with an adult child, the parties in this case will often elect to take title in this combined manner. The parents will hold title jointly and may decide to hold 60% of the title of the property between them. The adult child will have a 40% share of the title as tenant in common with his or her parents. If the adult child were to pass away, the child’s share could be left to whoever they wished in a Will and the two surviving parents would still have 60% of the ownership of the property. If one of the parents were to pass away and the other parent and adult child survive, the surviving parent would be entitled to the deceased parent’s share and the surviving parent would still have 60% share of the property. The surviving adult child would also still have his or her original 40% share in the property.
In a case where parents are on title either jointly or as tenants in common with an adult child and the adult child is allowing their common law spouse or significant other to live at the property, we always suggest that the parties see a family law lawyer to draft a cohabitation agreement to protect the owners’ interest in the property from any family law claims should the couple part ways.
Choosing how to take title to the property is a personal choice for the buyers, based on what fits their particular needs and wishes. If you have questions about what option would best fit in your situation, please discuss your concerns with your lawyers.