A big decision to make when buying a house is how you and your partner want your ownership to be reflected on the title. Understanding the different types of ownership is crucial when it comes to common law spouses and dating partners in Ontario. In this newsletter, we will explore the various types of legal ownership and how they impact partners and spouses who are buying real estate together.
Types of legal ownership in Ontario
First, let’s examine the different types of legal ownership, before discussing which options best fit your legal goals.
Sole Ownership
As the name suggests, sole ownership refers to one person having full legal ownership of a property. They have the exclusive rights to use, possess, and transfer the property as they see fit. If you read our other newsletter dealing with common law property rights, you will know that for unmarried couples, a non-titled spouse has no automatic legal entitlements or rights of possession in the property, unless otherwise specified in a legal agreement such as a cohabitation agreement.
Joint Tenancy
Joint tenancy is a form of co-ownership where each owner holds an equal, undivided interest in the property. With joint tenancy, the right of survivorship applies, meaning that if one owner passes away, their share automatically transfers to the surviving owner. This transfer completely avoids the deceased owner’s estate and any associated estate taxes that would otherwise apply. Common law spouses in Ontario can hold a property as joint tenants, ensuring that in the event of one partner’s death, the surviving partner automatically becomes the sole owner of the property.
Tenancy in Common
Tenancy in common is a form of co-ownership where two or more individuals own a property together. However, unlike joint tenancy, each owner holds a distinct, proportionate share in the property. This ownership structure may still be 50/50, but in the event of death, the interest in land would be divided according to the last will and testament of the deceased partner. If they do not have a will, the rules on intestacy apply, so understanding this risk is vital.
Which type of ownership is best for you?
Knowing which type of ownership works best for your situation may involve some legal advice.
For common law spouses who hold a property as joint tenants, the right of survivorship applies with a gift of all equity to your partner on your passing. The surviving partner automatically becomes the owner of the entire property, bypassing the estate. However, it is important to note the right of survivorship in land does not extend to other types of assets, such as bank accounts or investments, which may still need to go through the estate, unless the accounts were set up jointly.
For common law spouses who hold a property as tenants in common, the ownership shares are usually defined in a legal agreement or contract, typically a cohabitation agreement. In the case of separation, each partner’s respective ownership share is determined, which may consider factors such as financial contributions, mortgage payments, or other agreements made between the partners. In such cases, the property division is based on the specific arrangements made by the parties involved.
It is worth emphasizing that the laws surrounding common law couples and property ownership can be complex and vary based on individual circumstances. Therefore, it is prudent for common law spouses to consult with a knowledgeable family lawyer to create legal agreements, such as cohabitation agreements or domestic contracts, to outline their intentions and rights regarding property ownership.
Conclusion
In conclusion, understanding the different types of legal ownership of land is crucial for common law spouses in Ontario. Whether opting for sole ownership, joint tenancy, or tenancy in common, couples must consider their specific circumstances, intentions, and legal protections to ensure a satisfactory and secure property ownership arrangement.
We hope this newsletter has shed some light on the various types of legal ownership and their relation to common law spouses in Ontario.