Severance of a Joint Tenancy

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The methods to sever appear to be as follows:

1) disposition: if any or all of the joint tenants convey or dispose of their interests in a property to another party, then the joint tenancy arrangement is severed. This cannot be done secretly, the other joint tenants have to know about it. Now, if A, B and C are joint tenants and A conveys his interest to X, B and C are still joint tenants with one another. X holds his interest as a tenant in common with B and C. Also, you couldn’t have an arrangement where A sold his interest, yet he still stood to inherit from B and C and they didn’t even know about his sale. So, at the moment of the conveyance, the joint tenancy is severed. But, A can only sever it for himself. He cannot interfere with the reciprocal survivorship agreement between B and C. That agreement still continues.

A severance of the joint tenancy may be accomplished by A simply conveying his interest to himself, or by granting a legal mortgage (where the effect is to convey title).

This is a unilateral act by one of the parties to signify to the others that the survivorship agreement is terminated.

2) mutual agreement: like most situations, the joint tenancy may be severed by mutual agreement. Here, this only seems fair. Everyone knows about it, everyone consents, and if everyone signs a document to evidence this severance then the deal is done.

3) conduct of the parties: inconsistent activities by the parties have been recognized by the Courts as being sufficient to terminate joint tenancies. There seems to be a prevailing preference by the Courts to favour tenancy in common. That is because there are many hardship joint tenancy cases. A parent may leave property to two children as joint tenants only to find that 40 or 50 years later when the Will actually comes into play they are not speaking with one another. Then, they are left with the task of changing over the joint tenancy to tenancy in common. They may even list the property for sale. In many of these situations, the same law firm will be acting for the estate and both beneficiaries. Both children may have made Wills leaving the property to their own children. If a Court views the activities of the parties as being tantamount to a severance, then they will treat it as such. This is only necessary because they never got around to registering the new Deed. It was in the works, but it was never done. These cases are rare.

4) partition: this is accomplished pursuant to the Partition Act. Either party may make an application, and the Court has authority to divide the property or sell the property, or transfer the property to one of the parties and order the payment of compensation by the other party. The point here, is that it is not in anyone’s interest, that two people be stuck together as joint owners when they don’t get along. In fact, the real remedy offered by the Act is the dissolution of co-ownership. However, in some cases, it first may entail a severance of the joint tenancy and then the sale.

5) judicial sale: There are many reasons why property in co-ownership might be sold. The first is simply that one of the parties doesn’t want to be stuck with an ownership interest when he does not get along with the other owners, and they won’t agree to a sale. However, there is also the interest of a creditor who wishes to levy execution against the interest of one of the owners.

6) bankruptcy: this is a special arrangement to accommodate creditors, and there are procedures available to terminate joint tenancy, convert the interest, seize that interest and order its sale.

7) criminal act: this is very unusual, but some Courts have recognized the dissolution of joint tenancy by reason of criminal activity. So, if A murders B, A really should not be able to inherit B’s property. While there are other laws that might come into play, to prevent such an occurrence, nevertheless there is authority for this proposition in real property law.

8) statutory severance: in Ontario, under the Family Law Act there is a deemed severance of a property occupied by spouses as a matrimonial home, if the surviving spouse does not have a registered interest in the property. In this case, it is presumed that the deceased spouse would have changed the title to the property, but simply never got around to it. Therefore, the Act does it for them.

Brian Madigan LL.B., Broker

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