Severing Joint Tenancy in Ontario

When two or more people own property as joint tenants, their ownership generally includes a right of survivorship. If one joint tenant dies, that owner’s registered interest generally passes to the surviving joint owner or owners.

Severing a joint tenancy changes how the severed interest is held. The right of survivorship no longer applies to that interest, which may instead pass through the owner’s estate after death.

Nobari Law Professional Corporation assists Ontario property owners with preparing and registering documents to sever a joint tenancy.

Joint tenants own the property together with a right of survivorship. When one joint tenant dies, that person’s registered interest generally passes to the surviving joint tenant or joint tenants.

Tenants in common each hold an interest in the property without a right of survivorship. When a tenant in common dies, that owner’s interest generally forms part of their estate and is distributed under their Will or Ontario’s intestacy laws.

Severing a joint tenancy changes how the owners hold title.

It does not, by itself:

• remove an owner from title; 
• sell or physically divide the property; 
• transfer the other owner’s interest; 
• change who occupies the property; 
• discharge an existing mortgage; or 
• determine the owners' beneficial interests or resolve a disagreement between them.

After severance, the affected owner generally holds the severed interest as a tenant in common. If there are more than two owners, the resulting ownership will depend on the interest severed and the documents registered.

The exact effect of the severance will depend on how title is registered, the number of owners, and the documents registered.

A property owner may consider severing a joint tenancy because of:

• a change in estate-planning intentions; 
• separation or a change in a personal relationship; 
• a desire for their interest to pass through their estate; 
• concerns about the right of survivorship; 
• a co-ownership arrangement; or 
• another change in the owners’ circumstances. 

Severing a joint tenancy can have important estate, family-law, financial, and practical consequences. The decision should be considered before the registration is completed.

In Ontario, a joint tenancy may be severed through the registration of an appropriate transfer. Ontario’s land-registration guidance recognizes that a joint tenant may sever the joint tenancy by transferring their interest from themselves as joint tenant to themselves as tenant in common. 

This means that the signature of every joint owner is not necessarily required to register a severance. However, the circumstances of the ownership, any agreements or court orders, and applicable family-law considerations may affect the appropriate process.

The severance does not remove the other owner’s interest from the property.

The main effect of severing a joint tenancy is that the right of survivorship no longer applies to the severed interest.

After severance, that owner’s interest will generally be dealt with through their estate following death. It may pass:

• according to the owner’s Will; or 
• under Ontario’s intestacy laws if the owner dies without a valid Will. 

The owner should consider reviewing their Will and estate plan after the severance is completed.

Severing a joint tenancy does not automatically remove or change an existing mortgage, secured line of credit, lien, or other registration affecting the property.

Clients are responsible for contacting their lender or mortgage professional and addressing any requirements relating to notice, consent, refinancing, or changes to the borrowers.

The severance changes the form of registered ownership but does not, by itself, add or release anyone from an existing mortgage or credit agreement.

A joint tenancy may be severed following separation. Severing the joint tenancy changes the form of registered ownership and the right of survivorship, but it does not determine:

• who may occupy the property; 
• how family property will be divided; 
• whether the property must be sold; 
• whether one owner must transfer their interest to another; or 
• any other family-law rights or obligations. 

Nobari Law’s services are limited to the applicable real estate title work. Where separation or matrimonial-home issues are involved, clients should obtain advice from a family-law lawyer before proceeding.

Ontario’s land transfer tax guidance states that no land transfer tax is payable where a person transfers their interest to themselves solely to effect a severance of joint tenancy. The registration must include the appropriate land transfer tax statements explaining the purpose of the transfer. 

Different considerations may apply where the transaction also changes the ownership shares, includes another transfer, or involves money or other consideration.

The owners may later agree to change the ownership back to joint tenancy through another registered transfer.

Restoring joint tenancy generally requires the cooperation and signatures of the affected owners. 

Any existing financing, land transfer tax treatment, estate-planning consequences, and other requirements should be considered before another ownership change is registered.

A client may be asked to provide:

• valid, current identification and any additional documents required for identity verification;
• the property address and names of all registered owners;
• the reason for the proposed severance;
• marital-status information;
• mortgage or secured line-of-credit information, if requested; and
• any agreement or court order affecting the registered ownership or proposed severance.

Additional information may be required depending on the ownership and circumstances.

Do not send original documents, identification, complete account numbers, passwords, or other sensitive information unless requested by Nobari Law Professional Corporation. If requested, please use the document-sending method confirmed by the firm.

Depending on the registered ownership and scope of the retainer, Nobari Law Professional Corporation may assist with:

• reviewing the registered ownership as required; 
• reviewing the proposed change from joint tenancy to tenancy in common; 
• preparing the transfer and related registration documents; 
• preparing the applicable land transfer tax statements; 
• obtaining the required authorization and signatures; 
• registering the severance of joint tenancy; 
• addressing registration requirements that arise during the process; and 
• reporting to the client after registration. 

The legal services required will depend on the owners, property, existing financing, and surrounding circumstances. Nobari Law does not provide family-law or tax advice. Co-ownership disputes, family-law matters, tax consequences, and the sale or division of the property may require assistance from other qualified professionals.
 

Severing a joint tenancy changes the right of survivorship and how an owner’s interest will be dealt with after death.

Contact Nobari Law Professional Corporation to discuss severing a joint tenancy for property located in Ontario.