When real estate is sold, the ownership of the property passes to the new owner(s). There may be one owner or multiple owners. The owners may be individuals or they may be corporations. And under the category of "capacity" multiple owners are described with the words "Joint Tenant" or "Tenant in Common".

In a Joint Tenancy, if one owner dies before the property is sold, the surviving owner keeps the property by virtue of survivorship. One of the advantages of title passing this way is that the trustee of the deceased does not include the interest in the real estate when calculating the probate fees that are payable to administer the deceased's estate.

A Tenancy in Common means that more than one person is the owner of a single piece of property. If one owner dies, then the interest does not disappear; rather, it becomes part of the deceased's estate and is handled in accordance with any instructions contained by the deceased's Last Will and Testament. This is a preferred way to hold title with a business partner as opposed to a spouse.

I occasionally see problems arising in Joint Tenancy situations. Here is a common example: a widow has a son. He lives with his own spouse and children. The mother gifts a half interest in her home to her son and he takes title with her as Joint Tenants so that when she would die, he would be the owner of the house outright and no probate fees would be payable based on the value of her house. The problem is that the house was not the son's residence so he has to report any capital gains, which may be far greater than the 1.5% payable otherwise as probate fees.

On the other hand, there are opportunities for Tenancies in Common. There are many mixed families today and sometimes parents are concerned to ensure that children born from a previous union get their inheritance. A Tenancy in Common, combined with a Will can provide that a surviving spouse have a life interest in the commonly held property and that when the property is sold, the deceased spouse's interest shall be paid to the children.

There is no right answer that works for all people. Title decisions depend on the circumstances of the owners involved. Happily, buyers have a choice. It is important to consider all options with legal counsel before closing. The effect of two or three words on a Transfer can be significant.

-- Valentine Lovekin, Barrister & Solicitor