How Does Joint Tenancy Work?

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The term joint tenancy often refers to a legal agreement or contract in which two individuals or more jointly own a property. In this case, each partner has equal obligations and rights. A joint tenancy can be created by friends, business associates, married couples, relatives, and even non-married couples.

It is a legal relationship that creates a right of survivorship. That means if one of the property owners dies, their overall interest in the property is simply directed to the surviving partners without having to go through the court system or probate.

Joint tenancy – how it works

Generally, joint tenancy is some kind of property ownership usually associated with real estate investments. Two or more partners come together to create a legally-binding agreement with each other through a legal deed. As mentioned earlier, these partners might be friends, relatives, colleagues, business associates, or a couple.

Suppose an unmarried couple buys a property in Canada, and at the time of purchase, decide to create a joint tenancy. In that case, the deed to that property must have two names of the two partners as joint tenants. Since there is legal paperwork involved in the creation of a joint tenancy, it is in your best interests to consult with an experienced lawyer.

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The lawyer will help you create or review the contract involved to ensure that you don’t make mistakes that you would regret later.

Keep in mind that each party has a legitimate claim to the property, and they share the benefits associated with property ownership. Suppose they decide to rent out the house to another person or sell it; each partner is entitled to about 50 percent share in the revenue, specifically profits generated as rent or revenue associated with the sale of the same property.

However, this relationship also implies that the partners are equally responsible for addressing the costs associated with the property. Some of these expenses include property-related taxes, all mortgage payments, home maintenance, and more. If one of the partners fails to address their responsibility, the other party is legally required to assume that responsibility.

Note that tenancy agreement creates what’s commonly referred to as survivorship rights. That implies that if one of the partners dies, the other party will automatically assume the ownership (fully) of the house. This eliminates the need to transfer the deceased party’s assets to the estate (or the probate process). Generally, probate courts decide the validity of a will and share or divide the assets appropriately among the deceased’s heirs or beneficiaries.

While joint tenancy is closely linked to ownership of the real estate, joint tenancy with survivorship rights is a broad legal concept that may apply to many assets, including brokerage accounts and businesses. Note that the strong link to real estate exists because the word ‘tenancy’ is perceived as synonymous with living in a home or owning it.

Benefits of joint tenancy

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Generally, joint tenancy has many benefits. As long as one of the asset owners lives, there is no headache of clearing the asset via a complex and time-consuming process involving a will. Usually, a will must go through probate upon a person’s death. This is a legal process that allows courts to review a will and validate it if it satisfies set criteria. That person’s assets cannot be claimed or accessed by the survivor until probate grants access.

Additionally, the probate process determines how the assets will be distributed in case the deceased person didn’t name heirs or didn’t leave a will at all. This process takes several months to sort out. The good news is that this process is not necessary for joint tenancy, which means the other partners will take ownership of the asset immediately.

As mentioned earlier, the joint owners of a given property share profits. Similarly, these partners also share liabilities and other responsibilities associated with property ownership. One of the partners cannot take out a loan (mortgage) on the asset and leave the other party to pay the entire debt. Keep in mind that joint tenancy applies to all jointly owned assets and debts. That means if a loan is taken out on the house, both its owners are responsible for that debt.

Limitations of joint tenancy

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Joint tenancy has several limitations too. Divorce and other marriage-related issues can complicate joint tenancy agreements. As mentioned earlier, the assets and debts in a joint tenancy are owned by both partners. That means neither can sell the asset without consent from the other party. This makes the process of selling the asset complex, particularly if the other party isn’t willing to sell it.

Another limitation of joint tenancy arises when handling the property upon the death of one of the partners or joint owners. Probably you already know that the joint tenancy agreement gives the property rights to the surviving partners. Even if the deceased partner intended to pass the asset value to his beneficiaries, there’s no legal obligation for the surviving joint owners to honor such requests.


That said, there is an effective way to avoid losing control of the entire disposition of the asset upon your death. Some property joint owners choose tenancy in common rather than a joint tenancy. Tenancy in common (agreement) allows percentage-based asset ownership. That means shares can be easily traded, and tenants can also be added throughout the agreement instead of at inception.

So, if one of the property owners dies, the asset will not automatically go to the surviving partners, as is the case with a joint tenancy. The tenancy in common contract allows the property value to be distributed as mentioned in the will.

If you plan to establish a trust or ever need to go to court due to issues involving real estate issues, it is in your best interests to consult with an experienced real estate lawyer. He or she can help you navigate various real estate issues that may mean a lot of difference in your will.