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Land Title Choices For Co-Ownership

Land Title Choices for Co-Ownership

Breaking into the expensive B.C. real estate market is proving increasingly out of reach for many Canadians due to the rising cost of property in the province. In order to purchase an investment property in B.C. in a more affordable manner, many are choosing to purchase property together with a family member, friend, or other business partners. A practice commonly referred to as co-ownership. When creating a co-ownership agreement, one of the most important things you must decide is what kind of land title you will hold as co-owners of the property.

Co-ownership Choices for Land Title: Joint Tenancy, or Tenants in Common?

When deciding which type of land title to hold on co-owned property, the nature of your relationship with your co-owner will likely be the most important factor to consider. Your purchase or management of the property won’t significantly change due to the type of registration, but it will determine the asset’s distribution if you or your co-owner die. Each co-ownership has unique circumstances, and the owners should each consider how the land title will affect their personal estate plans. Let’s examine the two land titles’ differences and identify the co-ownership situations they best fit.

Joint Tenancy

This is the presumed title for most land purchases involving two people, who are most often spouses, however, there can be more than two owners on the property. Joint tenancy gives each owner an equal property share, and it doesn’t allow division into smaller or unequal portions among the owners. One of the primary benefits of joint tenancy is that when one owner dies, the surviving owner automatically becomes the owner of all shares in the property. In terms of estate planning, this has many benefits. The deceased owner’s shares automatically transfer to their co-owner, allowing widowed spouses to become the property’s sole owner without waiting for estate administration completion.

This can help grant some ease and peace of mind to grieving spouses facing a very difficult time in their lives. Another benefit of this automatic transfer is that the co-owners don’t need to include the house shares in their wills, which means the asset won’t be part of the probate process. In B.C, probate fees are roughly 1.4% of the total value of all probate assets in the estate. For most people in British Columbia, their homes are the most valuable asset they own, so keeping the family house out of probate can save most estates thousands of dollars at a minimum. Saving this money can also mean that you have extra cash to pass onto your heirs. 

If there are three or more joint tenants and one passes away, the surviving owners would each automatically receive an equal portion of the deceased’s shares.

Tenants in Common

Unlike joint tenancy, tenants in common are able to divide the property into shares of varying sizes. If a co-owner dies, their will would distribute their property share to its beneficiaries, not the co-owners of the property. Especially in cases of co-ownership of an investment property with friends or business partners, it’s important to carefully consider who you choose to inherit your share in the property. It is a good idea to discuss your succession plans for your shares with your co-owners to avoid uncomfortable situations for your beneficiary and business partner(s). The succession of shares in the co-owned property should also be discussed in your co-ownership agreement to ensure a smooth transfer of the assets for all interested parties when the time comes. 

In the end, the type of land title that is best for your co-ownership will depend on your unique circumstances. Co-owners should carefully tailor their agreements to suit the unique needs of their situation and their assets. If you’re looking to make an investment purchase with one or more other investors, or are considering buying a house jointly with a spouse or partner, contact an experienced lawyer today to prepare you and your partners to protect your rights over the asset.

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