By Alicia Natividad, B.A., L.L.B

 

            The concept of ownership came into being when someone said “This is mine”.  Battles have been fought, won and lost for lands, chattles, persons and principles of ownership.  Unfortunately, not enough attention is paid at the beginning before the property is registered as to how title is taken, particularly, when one is dealing with land.

 

            The first thing to remember is that any dealing with land must be in writing.  Historically, land was transferred by standing on the land and passing a bough to the person to whom the land was to be transferred.  This mode of transfer changed with The Statute of Frauds which required that a transfer of land be in writing.

 

            Another change occurred when the document in writing (the deed/transfer) had to be registered in the Land Registry Office where the land was located.

 

            The latest change is a reflection of the technological era  we live in:  the document in writing has become an electronic data that is transmitted or registered in the appropriate Land Registry Office through the internet.  A printed copy is available but the data is in electronic form.

 

            Irregardless of the technological change the issue that has not changed is who is going to own the land or, as lawyers will ask their clients: in whose name will title be taken?  Title is the right to ownership.  Whoever is “on title” is presumed to own the land.  If your name is not “on title”, it means that there is no record of your ownership unless you can prove otherwise.

 

            For example, if title is taken in the name of only one person, it presumes that this person is intended to be the only owner of the land.  But, there are situations where the person on title is intended not to be the true owner of the land but to hold the land either for himself/herself and/or for other persons.  The law characterizes this situation as a “trust” situation and, for this trust situation to be enforceable in law, there must be a document called a “Declaration of Trust” to prove that the registered owner is holding the property in trust for others or for himself or herself and others.

 

            If there is no Declaration of Trust, it will be difficult for the other persons who are not registered on title to prove their claim.  Sometimes, there are reasons why people do not want their agreement to be put in writing.  If so, then, the risk is that the law will not enforce an oral agreement that deals with the land.

 

            If two or more individuals are shown on title as owners, the next issue is how do you take title.   There are two ways: tenancy-in-common or joint tenancy.  The distinction between the two is that there is no right of survivorship with tenancy-in-common.  If a tenant-in-common dies, his or her share of the property will pass to his or her estate on death.

 

            In a joint tenancy, if one joint tenant owner dies, the surviving owner automatically becomes the owner of the property, subject to proving the death of the joint tenant and registering the appropriate documentation on title.

 

            In Quebec the concept of joint tenancy does not exist.  Each registered owner is a tenant-in-common and, on death, the interest of a deceased person will pass only to his or her estate.  The only way that a surviving owner can receive the interest of a deceased owner is for the deceased owner to give his or her interest in the property to the surviving owner in his or her Will.  If a deceased owner does not have a Will, then the surviving owner cannot get the deceased owner’s interest in the land.

 

            So, for individuals who own cottages or other properties in Quebec and who intend to give his or her interest in the property to a surviving owner, that individual must make a Will which specifically states that his or her interest in a property will go to a surviving tenant-in-common.  There is an advantage to have such a Will prepared by a Quebec notary; on the death of a deceased owner, the Will does not have to be proven or probated.  However, a Will prepared in Ontario will achieve the same purpose.

 

            In Ontario, if the intention of the registered owners is for the surviving owner to receive the property on death, then, it need only be reflected on the way title is taken when the deed/transfer is registered, that is, as joint tenants. 

 

            Generally, most spouses take title as joint tenants for a number of reasons.  Firstly, it means that the surviving spouse will automatically become the owner of the property on the death of the other spouse.  Secondly, properties owned in joint tenancies do not form part of the assets of a deceased person for the purpose of calculating “probate fees” or the fee paid to the Province of Ontario to apply for a Certificate of Appointment as Estate Trustee. 

 

            Joint tenancies can change to a tenancy-in-common, either by the registration of a deed/transfer from the two joint tenants to each other as tenants-in-common or by one spouse registering a deed/transfer to himself or herself.    Often spouses  who intend to separate register the latter deed/transfer without the knowledge of the other spouse.  This is done to protect his or her interest and to show that he or she is claiming a one-half interest in the property.

 

            If property is taken as tenants-in-common another issue to consider is what is the percentage of ownership.  Will it reflect the amount of money that each tenant-in-common has or will contribute to the purchase of the property?  Will it reflect the services or money in kind that one spouse may put into the property?   The percentage of ownership is important because it determines the extent of a person’s ownership in the property, which then determines the division of the net sale proceeds when the property is sold, the tax considerations if the property is an income or secondary property, the sharing of costs, and so on.

 

            Other issues to consider are how to share costs and expenses, how to divide the profits, what will happen to the property on death, separation and divorce.  For tenants-in-common it is useful to have a written agreement that deal with these issues.

 

            The same advice holds true for joint tenant owners, particularly, if there is an unequal contribution to the purchase of a property, or who are in a common law or same sex relationship.  If the issue of ownership, transfer of interest, sharing of costs and expenses, and disposition of the property, are not discussed at the beginning of the purchase, it will surely be an issue on separation, divorce, or death.