*Please note that School of Scheff is not legal advice and should not be taken as such. School of Scheff provides legal information which is specific to the Province of Alberta. Should you reside outside the Province of Alberta, please contact a lawyer in your jurisdiction with any legal queries as the laws across the Canadian provinces vary widely.*
Partners-in-Pie: Joint Tenancy & Tenants-in-Common Explained
Joint tenants and tenants-in-common are the two ways in which you can hold property with another person. Each one of them have their benefits but few people fully understand the difference between the two.
The way I like to explain the difference between joint tenancy and tenants-in-common is to use dessert references – because who doesn’t like dessert?
Think of the ownership interests like a pie…or cookie…or cake…or any sort of delicious treat that is divisible into shares.
The most important difference between joint tenancy and tenants-in-common is what happens to your share of the pie if you die.
In joint tenancy, if you and your partner have a pie together, at law it is assumed that you both intend to share that pie equally. 50/50. Likewise, if you currently have your own pie and you decide that you’d like to share that pie with someone, the law presumes you intended to share 50% of that pie the moment that you do – with a property this would be when you register them on title. If there is a dispute later about intentions or ownership interests, this presumption has to be rebutted.
Now you have this pie that is divided in half, 50/50, if you died your partner-in-pie would receive the entire pie. You could not leave your share of this pie to anyone else. If your partner-in-pie died, you would receive the entire pie. They could not leave their share of the pie to anyone else. This is referred to as the law of survivorship or the right of survivorship. The people with shares of the pie who survive the others retain the pie amongst themselves. In a multiple person situation, this continues until there remains only one partner-in-pie left.
You may also share the pie with multiple people and still hold it as joint tenants. You could have a pie party and have many partners-in-pie! You can share your pie with 3, 4, 6, 8 or more people – though that’s a lot of partners-in-pie…
In our example above, if you, your partner-in-pie, and your child decide to purchase a pie together, at law it is still presumed that you intended to share that pie equally. 33 1/3, 33 1/3, and 33 1/3. Likewise, if you currently have your own pie and decided to share that pie with those two people, the law would presume you intended to share 66% of that pie (33.33% for each person).
Tenants in common is a bit different. If you and your partner have a pie together, you may decide to unequally divide that pie. Maybe you like pie more than your partner. Maybe you put in more money to buy the pie. Maybe you spent more time baking the pie. You could split the pie 50/50, 60/40, 70/30, 80/20 or any other desired proportions. If your partner-in-pie dies, you do not automatically receive their piece of the pie. They may choose to leave their piece of the pie to any person of their choosing. Your piece of the pie and their piece of the pie, while still in the same pan, are no longer a unified pie. Think of it like pieces of the pie that have already been cut, but remain separate in the pie pan.
With tenants-in-common, you may also share the pie with multiple people, as you could with joint tenancy. You could have the same pie party and share your pie with 3, 4, 6, 8 or more people. With this many partners-in-pie, each person gets a piece of the pie and retains that piece of the pie through their death. This arrangement is more common with unrelated partners-in-pie such as business partners or common law spouses who may want to keep their assets separate.
Each partner-in-pie could leave their piece to someone different, a business partner, a sibling, a child or grandchild, or any other person they may want to leave their precious pie to (if they’ve written a Will of course! If not, the legislation decides where that precious piece of pie will go).
All pie references aside, joint tenancy and tenants-in-common, if not considered carefully can have unintended consequences. Most often, this happens in the estate context when someone is placed on title to the property to avoid probate and there aren’t appropriate agreements put in place to outline exactly what the intentions were and what the ownership interests truly are. While delicious, pie can be a serious source of conflict at the time of someone’s death, in particular seasonal pies such as the family cottage. The more partners-in-pie involved and the closer the relationship, the more important it is to be clear about the nature of the ownership interests.