As we are asked to quarantine in our homes and as the uncertainties of the economy may have impacted our livelihood, some of us may reconsider our decision to separate from our partner or spouse for the time being.
Being afraid of the impact of a high-conflict separation as we continue to live under the same roof, in particular with the lockdowns, we may prefer to wait it out before taking any steps. At the same time, estate planning may be top of mind for us as we face COVID-19 and what it may mean for us.
In these circumstances, one of the things to think about is what you would like to see happen to your interest in jointly held property in the event that something were to happen to you.
Understanding the two types of ownership in law
Two or more persons may own property either by way of:
- Joint tenancy, or;
- Tenancy in common.
Joint tenancy means that you and the other co-owner(s) hold an equal interest in property. In contrast, a tenancy in common means that one co-owner may be entitled to more or less interest in the property than you.
The critical difference between the two types of ownership has to do with what happens at death and what is called, “the right of survivorship.”
The right of survivorship
The right of survivorship allows for the entirety of your interest to pass equally to the other co-owner(s) upon your death. In other words, if you own a home jointly with your spouse, upon your death, the entirety of your 50% share will automatically devolve to the other spouse and he or she can claim exclusive ownership of the home. In contrast, if you own the property by way of “tenancy in common,” your interest upon death passes to your estate.
If you do not wish for your interest to devolve to your husband or wife automatically upon your death, you must do what in law is referred to as “severing” the joint tenancy. There are three ways in which you can sever joint tenancy in law.
- You can unilaterally act on your own share.
- You can agree with the other side to sever the joint tenancy.
- There is what is referred to in law as “a course of dealing” between you and other co-owners from which it can be inferred that you intended to sever the joint tenancy. To establish a “course of dealing” is a fact-specific inquiry and can be the subject of much litigation. The issue recently was before the Court of Appeal for Ontario in Marley v. Salga 2020 ONCA 104 (C.A.).
Ensure your intention is carried out upon separation
The simplest way to ensure your intention is carried out upon separation is simply to instruct a real estate lawyer to sever the joint tenancy. While ordinarily dealing with a matrimonial home which is defined as the home that is ordinarily occupied by you and your spouse on the date of separation as your family residence requires the other party’s consent e.g., if you wish to encumber or dispose of the property in any way to a third party, this is not the case in terms of severing joint tenancy. You can sever the joint tenancy in the absence of your spouse’s consent, without violating the Family Law Act.
Are you considering a separation in Ontario? Maleki Liew LLP is dedicated to a client-centred approach and is ready to help during this unprecedented time.