Joint tenancy is a way for two or more people to own property together. Types of property can include land, a house or bank accounts.
The property is registered in everyone’s name, as joint tenants. Each joint tenant owns the property equally and indivisibly. If one owner dies, the property passes to the other owner(s). This is called the “right of survivorship”. For example, if you and your spouse are listed as owners in joint tenancy on the title to your house, then your spouse will become the sole owner of the house if you die first. You would become the sole owner if your spouse dies first.
There are many advantages to joint tenancy, especially for partners and spouses:
- If one owner loses mental capacity, the other owners can still make decisions about the property.
- If one owner dies, the property automatically passes to the other owner(s).
- Property owned in joint tenancy does not form part of your estate (because of the right of survivorship). This means the property is not listed on an application for a grant of probate or administration. It also means the property is not included when calculating probate fees.
There are some drawbacks too:
- Sometimes parents will add their children to their bank accounts. Because each owner can make decisions about the property, this can lead to misuse of funds or fraud. For example, one owner of a joint bank account can withdraw money or write cheques without the other owner’s consent or knowledge.
- Other times parents will add a child as owners of their home for convenience’s sake. This can lead to confusion when the parents die. Did the parents intend for the child to keep the house and disadvantage their other children?
If you are thinking of adding someone as a joint owner to your property, make sure you understand what they can do and think about whether you trust them.
Joint tenancy is different from tenants in common. Tenants in common each own a share of the whole property and can decide what to do with their share. For example, two tenants in common might each own 50% of the property. Each person can decide what happens with their 50%, including selling it or giving it away in their Will.
If you are not sure if you own property as joint tenants or tenants in common, check the certificate of title (for real estate) or bank account statements. If the certificate of title is not clear, the law assumes the owners of land are tenants in common.