What happens to property when the owner dies?
October 24, 2019
When you purchase a property, there are many ways to take title. The way in which you take title will often depend on your circumstances. Is the property an investment with partners or a family home? Are you going to live in the property or rent it out? How do you want the property to transfer when you sell the property or if an owner dies?
This article will explore the following three ways to take title to a property and their effects on your ownership: Joint Tenancy, Tenants in Common, and Sole Ownership.
JOINT TENANCY
When two or more people purchase a property as joint tenants, it entitles them to an equal share in the property. In a Joint Tenancy, each owner on title owns 100 per cent of the property. Joint Tenancy is the most common form of ownership for spouses or family members, as it allows for the property to pass to a surviving owner(s) by right of survivorship. This means that the property doesn’t need to be in a will and does not form part of a deceased’s estate. It avoids probate, saving both time and money. The deceased owner’s name is removed from title to the property and the remaining owners increase their ownership interest proportionately. The process for removing the deceased person’s name requires the provision of proof of death (e.g. an original death certificate) and the registration of a Survivorship Application by the remaining owners.
TENANCY IN COMMON
Unlike a Joint Tenancy, when two or more people hold title to a property as Tenants in Common, each owner owns their proportionate share only. Therefore, if one of the owners dies, the deceased owner’s share is dealt with through the deceased’s estate. For example, if Larry, Moe and Curly own a property, each with a 1/3 share, and Larry dies, Larry’s interest is dealt with in accordance with his will. Neither Moe nor Curly would receive Larry’s ownership interest in the property. Tenants in Common have no right of survivorship.
SOLE REGISTERED OWNER
If a party owns property as the Sole Registered Owner, then upon their death, the property would be dealt with through the probate of their estate. If the owner dies without a will, or intestate, then the property would be passed according to the laws of intestacy in the prevailing jurisdiction.
CORPORATIONS
If land is held in a corporation, the death of a shareholder has no direct impact on the ownership of the land. The shareholder’s estate would deal with the shares in accordance with estate and tax law where the shareholderresided.
LIMITED PARTNERSHIP
Ownership of land in Limited Partnership is held by the general partner as trustee so the same rules apply as above for a corporation. The death of a holder of a Limited Partnership unit has no direct impact on the ownership of the land. The unit holder’s estate would deal with the shares in accordance with estate and tax law where the unit holder resided.
No matter what your goals are for your new property, you should discuss your ownership options and any plans you have for the property with your real estate lawyer. Feel free to ask lots of questions and ensure that the manner in which you take title is best suited for your needs.
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