Different Types of Home Ownership

 

The laws covering property ownership may differ from province to province in Canada. In general  (aside from sole ownership) there are five basic ways for two or more individuals to own real estate. Each person involved in ownership in the transaction should obtain his or her own independent legal advice as to the method of ownership and potential liability as an owner.

Joint tenancy
Under this type of ownership, each owner owns equally. Joint tenancy typically means that should a purchaser become deceased, the remaining purchaser(s) on the title will inherit the deceased's interest in the property. Where one of the "joint tenants" dies, the surviving joint tenant(s) usually automatically becomes the owner(s) of the property no matter what a will might state. This is the manner of holding titles most commonly used by spouses.

Tenants-in-common
Under this type of ownership, each owner’s share can be different (e.g. John owns 90% and Jim owns 10%). Tenancy in Common means that should a purchaser become deceased, the deceased person's interest in the real estate will be transferred according to that person's will. If no will exists, then the law of the province will apply.

Condo ownership
Condo ownership has rapidly become a feature of North American cities.  Condos, lofts, and other variations (such as townhouses) are all available.  A condo owner gets title or ownership of the individual unit and has sole responsibility for maintaining that unit, but they also acquire an interest in the condo corporation that owns the common elements of the building or community. Condo owners pay a monthly fee to the condo corporation as their share of those expenses to maintain the common elements. 

Condo ownership can look easy, but the transaction is a little more complicated than a regular house purchase.  For example, there are many documents that must be prepared and registered to ensure that the entire project—not just the one condo that may be being purchased—is legitimate under the provincial condominium laws.

Life interest
A life interest form of ownership entails giving a person the right to live in, occupy or use a piece of property for as long as they live.  When they die, they lose any interest in the property.  This type of ownership of real estate can be useful in a situation, for example, where a man wants to let his second wife use a property until her death, at which time it would go to his children from a first marriage.

The partnership agreement
If more than one person will be shown on the title as owner and, if only one person is providing all (or a substantial portion) of the funds needed for the purchase, you may wish to consider entering into a special partnership agreement to avoid any future misunderstanding with respect to the distribution of proceeds upon a resale of the property. Should you wish such an agreement to be prepared for signature when you sign the final closing documents, please inform your real estate lawyer.

One of the features of such an agreement is to return to each purchaser whatever cash was originally contributed by each purchaser at the time of completing the transaction as well as any additional contributions made to improving the property during the period of ownership. Other features of the agreement deal with the distribution of the balance of proceeds once the property is eventually resold and what happens if one partner wishes to sell and the other partner does not. Each partner should consider obtaining independent legal advice before entering into a partnership agreement.