• Fatma
• 12-Sep-2024

While purchasing a property with a co-owner in Canada, many people choose joint tenancy and here ‘right of survivorship’ applies. This means that when one co-owner passes away, the surviving co-owner automatically inherits their (co-owner who has passed away) share of the property, bypassing the need for probate.  

But can this right of survivorship be challenged? In this blog, you will be able to explore joint tenancy, the possible complications, how the right of survivorship works, and whether the right of survivorship can be contested under Canadian law.  

Understanding The Right of Survivorship

This is a key feature of joint tenancy, which is a form of co-ownership. In this type of ownership, two or more people own a property and hold equal shares for this property. When one of the joint tenants passes away, their share doesn't go to their heirs or pass through their will. Their share transfers directly to the surviving joint tenant or tenants because of the right of survivorship. This happens automatically. For some individuals this is a more suitable form of ownership and it avoids the lengthy and sometimes costly probate process.

 

Joint Tenancy vs. Tenancy in Common

We are going to explore both of these ownership types and understand the difference because this will help you understand the right of survivorship better.

You should know that in Joint Tenancy, each owner will have an equal share of the property. In this type of ownership, the right of survivorship applies and when one of the joint tenants is no more, their share passes directly to the surviving owner or owners. This is an attractive arrangement for spouses or family members who want the property to remain in the family.

In Tenancy in Common or Common Tenancy as some call it, each owner can own a different percentage/share of the property. When one co-owner dies, their share does not automatically pass to the other owners. It is rather transferred according to their will. In case there is no will, it is distributed according to provincial intestacy laws. This is a form of ownership usually chosen by business partners or individuals where they have made different contributions to the property.

 

Can the Right of Survivorship Be Challenged- an important question

Anyone investing in real estate in Canada should have a clear understanding of this concept. Even though the right of survivorship seems explicit, there are circumstances where it can be contested. Let us explore some situations where the right of survivorship can be challenged in Canada:

1. Lack of Intention or Mistake

    

   This can be a ground for challenging this law. For the right of survivorship to be applicable, the co-owners must have clearly intended to create a joint tenancy. If one of the co-owners can prove that they did not intend to enter into a joint tenancy or they misunderstood the nature of the agreement, the court may consider altering the arrangement.

    

   Consider a situation where a person buys a property with a sibling but didn't understand that in joint tenancy their sibling would inherit the entire property if they died. The person can challenge the agreement in such a case. The court will then examine different evidence such as conversations, legal documents, professional advice that was given while buying the property, etc.

2. Fraud, Undue Influence, or Coercion

    

   This can be a significant ground to challenge the right of survivorship. If one of the joint tenants challenges the agreement with the claim that they were forced, manipulated or improperly influenced to agree for this arrangement, the court will intervene.

    

   There may be a situation where an old person is forced by a family member or caregivers to add them as a joint tenant. The other heirs can challenge the right of survivorship claiming suspicious circumstances. Joint Tenancy can then be severed if the court finds evidence of such coercion or fraud.

3. Unequal Contribution to the Property

    

   Joint Tenancy is a form of ownership where everyone holds equal shares. For buying or maintaining the property, one party may have contributed more in terms of finances. This situation may lead to a dispute after the death of the joint tenant (who made the major contribution) if other heirs have objection to the property being transferred entirely to the surviving joint tenant.

    

   There can be a situation where a parent owns a home with one of the children. If the parent made a significant or the entire financial contribution, then other children can contest the right of survivorship.

4. Inconsistent with a Will or Estate Plan

    

   Sometimes, a co-owner's will or estate plan may not be in accordance with the right of survivorship. If the person leaves a property to someone other than the joint tenant or tenants in the will, it will automatically lead to disputes.

    

   There may be a situation where a parent leaves a will according to which the property should be divided equally between all the children. But the parent might have owned the property in joint tenancy with one child. In this case, other children may go to the court to challenge the right of survivorship. The courts will then take into account the individual’s intentions and evidence to decide if the will should prevail or the right of survivorship should be honoured.

5. Unconscionability

    

   This is another ground for contesting the right of survivorship. Unconscionability means that letting the right of survivorship prevail would be unfair or unjust. This can happen when the surviving joint tenant might have acted in bad faith.

    

   There can be circumstances where business partners were joint tenants. If the surviving partner has betrayed or defrauded the partner who passed away, the family of the deceased tenant can argue that it would be unconscionable for the surviving co-owner to inherit the entire property. Courts can take a broad view of fairness and justice in such situations.

How Courts Handle Challenges to the Right of Survivorship?

If disputes arise over the right of survivorship, the courts in Canada evaluate several factors. These factors include:

 

• The intentions of the parties when they created the joint tenancy.
• Evidence of any fraud, undue influence, or coercion at the time of entering the agreement.
• The monetary contribution of each party/joint tenant to the property.
• The overall fairness of allowing the right of survivorship to stand.

The courts can sever the joint tenancy based on different factors and can declare the property to be divided differently if a fair ground exists.

 

How to Protect Your Rights?

If you want to enter into a joint tenancy, you need to understand the legal implications and possible challenges.

 

These are some important tips:

1. Always seek legal advice when entering into any form of ownership. Houseclosing has legal experts who can ensure your rights are protected and you fully understand the agreement and consequences.
2. Legal expertise should be sought to document intentions clearly. The agreement should reflect your intentions and document all discussions or decisions pertaining to the right of survivorship.
3. Update your estate plan and will so that it aligns with your property ownership arrangements and agreements.
4. If you or other co-owner have made an unequal contribution to the property, it is better to create a written agreement outlining how the property should be divided in the event of your death.

 

Conclusion

Joint Tenancy can be a fruitful or suitable arrangement for some people but the right of survivorship may be challenged in certain situations. If you have any questions about joint tenancy or the right of survivorship, legal experts at Houseclosing can provide guidance to protect your rights and ensure your intentions are honoured.