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Understanding Alberta Tenants in Common

Image Source: Pexels

 

Are you planning on investing in a real estate property in Alberta? If you want to buy a property with two or more people, you can do so as a joint tenancy or a tenancy in common. 

 

Both forms of ownership set you up as co-owners, meaning you have equal rights and obligations over the property. However, they affect the rights of each party differently in the case of a divorce or if one of the tenants dies.

 

Choosing the ownership structure of your dream home is critical for estate planning. Otherwise, it can lead to serious legal and financial issues. This is why it’s always a good idea to get legal advice from a real estate lawyer. They can help you understand the outcomes of a joint tenancy and a tenancy in common and determine which one is better for you. 

 

Are you interested in holding property in Alberta as tenants in common? If so, here’s what you need to know for a starter. 

 

Key Takeaways:

 

  • The existence or absence of a probate or will can determine what the survivors inherit after the property owner’s death. In a joint tenancy, the survivors quickly inherit interests in the property intestate. You need the will to inherit the same interests under tenancy in common. 
  • You can protect your heirs’ interests in your property if you settle succession-related matters with an estate planner or family lawyer. 
  • Suppose the title is unclear or silent on the nature of the tenancy. In that case, the provisions of Alberta’s Law of Property Act will apply. 

 

What is Tenancy in Common (TIC)?

Tenancy in common (TIC) is a form of ownership where two or more parties hold undivided property interests under the same title. Therefore, all owners have equal rights to the entire property and can’t exclusively claim a particular area. However, while none of them have exclusive rights to any specific portion, they can own unequal property shares. 

 

What does that mean? Let’s say tenant A owns 50% of the property. Meanwhile, tenants B and C each own only 25%. Even if tenant A has a larger percentage of ownership interests, all owners still have the right to occupy and enjoy the entire property. Therefore, if you and your family members want to use the house for the weekend, even though you only own 25% of it, you have the right to use all of it. 

 

Tenants in common can independently deal with their interests. This means that each owner has the right to leave their share of the property to beneficiaries. If the individual TIC owner wants to sell, trade, or transfer ownership, they may also do so. 

Joint Tenants vs. Tenants in Common

Joint tenancy is another form of ownership. While it’s nearly the same as a tenancy in common, there are some distinctions. 

 

Unlike tenants in common, all joint tenants own equal interests or shares of the property, which is proportional to the number of owners involved. Therefore, if there are two tenants, each must own 50%. If there are four joint tenants, they would each own 25%. 

 

Tenants in common can acquire ownership at different times. However, joint tenants are required to simultaneously obtain tenancies and titles. Under no circumstances can a joint tenant’s possession start before or after the others. 

 

The main distinction between these two forms of ownership is the rights of survivorship, which is the right of surviving owners to inherit the deceased tenant’s interest in the property. The remaining tenants get the deceased’s ownership interest without will or probate if the property is owned under a joint tenancy. 

 

That does not, however, apply to property owners in a tenancy in common. When one of the tenants in common dies, their share in the land passes to their estate and goes to the beneficiaries specified in the deceased owner’s will. 

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How does tenancy in common define each owner’s interest?

Tenants in common can have an equal or unequal share of the property. However, how is each owner’s interest in a tenancy in common defined? Unless explicitly stated in the ownership agreement, no allocation of proportionate interests may be indicated on the land title certificate. 

 

If the percentage of each owner’s interest isn’t specified, the law presumes that all tenants hold equal shares. However, one method of specifying interests is through a statutory declaration, which is signed by all tenants in common and where each owner declares their portion of interests in the property. 

Changing proportionate interest

Tenants in common may wish to change their proportionate interests. To do so, they’ll need to transfer a portion of their interests. Let’s say tenants A and B each have a 50% interest share and desire to change to a 20-80 allocation, respectively. Tenant A may transfer an undivided 30% property interest to tenant B.

 

Fees on changing proportionate interest will be imposed on the value of the percentage transferred. In the case above, it should be based on the 30% interest share transferred by tenant A to tenant B. 

 

Transferring property interests

Each owner in a tenancy in common can transfer their interest in the property to someone else. There must, however, be a verification if a tenant in common is passing their share to another co-owner. 

 

Tenants in common are entitled to transfer their ownership interests at any time during the tenant’s life. The same holds true for inheritances. Transferring property interests to other parties can be done in several ways, such as the following: 

  • Through a sale or transfer: A tenant in common is free to sell or transfer their property share. However, co-tenants can make a separate agreement and restrict the rights of co-owners. For example, the agreement may allow them to buy the other co-tenant’s shares before that co-tenant sells it to someone else. Other agreements may give co-owners the right to first assess the new buyer. 


  • Transfer by will or intestacy: Without the right of survivorship in a tenancy in common, each owner is free to pass their share at the time of death. If there’s a will, the beneficiaries receive the deceased’s ownership interest. However, if there’s no will, then the laws of intestacy apply, and the shares will be transferred accordingly.

What is the default ownership if the title does not specify tenancy?

When the property has more than one owner, the nature of the co-ownership must be specified on the title certificate, which helps to avoid unnecessary disputes in the future. However, what if the title doesn’t define the type of property ownership between two or more tenants?

If unspecified, the default ownership of property held by two or more persons under Alberta’s Law of Property Act is presumed to be the following:

  • Joint tenancy for tangible personal property, such as cars, bank accounts, and investments
  • Tenancy in common for real property, such as a house and land

Whether you want to buy or have an interest in land, make sure that you specify the tenancy on the title or transfer document. Otherwise, the law will automatically assume a tenancy in common. 

Changing the form of co-ownership

It may so happen that a co-owner wants to change from one tenancy to another. If you decide to switch from a tenancy in common to a joint tenancy or vice versa, a transfer must be signed by each co-tenant and registered. When co-owners transfer the same proportionate interests while holding identical shares, the nominal transfer fee listed in Tariff item 3 is applied. 

 

Should you hold property as tenants in common or joint tenants?

Homeowners or property owners need to evaluate their situation to determine which type of co-ownership is more favourable. Assessing the benefits and drawbacks of a tenancy in common and a joint tenancy may also help you make an informed decision. 

 

Benefits and Drawbacks as Tenants in Common

Holding property as tenants in common may be well-suited for those who aren’t legally married. A tenancy in common might benefit you if you’re buying a property with a friend or business partner. Instead of leaving your shares to owners who aren’t related to you, you can pass them to your beneficiaries through a will. 

 

This type of ownership may also make sense for real estate investors. Since members can easily be added over time, it’s easier for them to own a percentage or sell their shares. The drawback, however, is that a co-owner can sell their interest to anyone without consulting the other tenants, which may create an unexpected dynamic and disputes. 

 

Benefits and Drawbacks as Joint Tenants

Anyone buying a home with a spouse or partner can benefit from being joint tenants. Since there is a right of survivorship, surviving co-owners will get the property upon the death of a joint tenant. This means that your spouse won’t have to go through lengthy legal proceedings and will immediately get your interest in the property even if you don’t leave a will behind. 

 

This form of ownership may also be suitable for first-time homebuyers. Since ownership must be obtained simultaneously, it can make the property more affordable. Joint tenants can split the down payment and easily qualify for a mortgage. 

 

However, difficulties may arise if there are issues in the relationship of the co-tenants, as no one can sell the property or portion of their shares without the consent of the other. Joint tenancy automatically gives all the ownership rights to their co-owners, which means that the deceased owner can’t pass their share to their heirs.

Pro Tip

You must seek legal advice to navigate these types of co-ownerships. Sound legal advice will help you determine the most suitable kind of co-ownership and guarantee its accurate and effective creation.

Consult a Real Estate Lawyer When Planning To Buy a Co-owned Property

Choosing the most appropriate type of ownership is important when you’re buying a co-owned property. However, it can be overwhelming, especially when it’s your first time. Make sure you understand the legal implications of holding property with two or more people. 

A real estate lawyer is the best person to consult about this matter. They will help determine the best form of ownership for your situation. They will also ensure that your co-ownership agreement is accurately and effectively crafted. Contact us today and get legal advice from Diamond & Diamond lawyers. 

The complications of co-ownership should not hinder you. All it takes is careful planning. Protect your interest by working with the experts, Diamond & Diamond AB! Book a free consultation today!

FAQ on Understanding Alberta Tenants In Common

Can a single tenant in common sell the entire property without consent from all co-owners?

While a tenant in common can sell their portion of the share, they cannot sell the entire property without permission from the others. However, they can petition the court to partition or force the sale of the whole property. 

What’s the maximum number of tenants on the title of a property?

Two or more persons can be on the title of a property in both joint tenancies and tenants in common. There’s no limit to the maximum number of tenants who can hold the property’s title with you. 

Do we need to pay an equal amount when buying a tenancy in common property through a mortgage?

When buying property as a tenancy in common, owners can get different shares of ownership, which means that you don’t have to pay an equal amount. Each owner is responsible for paying their share of the mortgage payments based on their ownership percentage.

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