Tag: joint owners

16 Oct

The Risks of Joint Tenancy

Rebecca Rauws Estate & Trust, Joint Accounts, Uncategorized Tags: , , , , , , , , , , , , 0 Comments

Although there are certainly some benefits that may result from making ownership of a property or other asset joint with another individual (e.g. avoiding payment of estate administration tax in relation to that property upon the death of one of the joint owners), there can also be risks associated with jointly-held property.

In the recent British Columbia Supreme Court decision in Gully v Gully, 2018 BCSC 1590, a mother added her son as a joint tenant on real property that she owned (the “House”). Her decision to do so was based on estate planning advice that she had received. The mother did not tell her son that she had added him as a joint tenant, and the son did not contribute to the House in any way, either before or after it was transferred into joint tenancy. Contemporaneously with the registration of title to the House in joint tenancy, the mother also executed a last will and testament specifically setting out that in naming her son as a joint owner, she intended that the asset would belong to him upon her death.

A couple of years after the mother had added the son as a joint tenant on her House, the son and his software company consented to judgment in favour of a creditor in the amount of $800,000.00. At the time he consented to judgment, the son was still not aware that he was a joint owner of his mother’s House. The creditor subsequently registered a certificate of judgment on the son’s undivided half interest in the House.

The mother brought an application seeking a declaration that the son held his interest in the House on a resulting trust in her favour. The court stated that the proper evidence of a transferor’s intention is at the time of the transfer, because a transferor can change his or her mind subsequent to the transfer, but may not retract a gift once it has been made. In this case the court concluded that the mother did intend to gift an interest in the House to her son at the time the joint tenancy was registered on title, and that the son did not hold his interest on a resulting trust in favour of the mother.

Further, the court stated that even if it had found that the mother had not intended to gift the House to the son, the fact that the joint tenancy was registered on title to the House meant that the creditor could rely on title to enforce its judgment against the son’s interest in the House. Although the issue of whether or not a resulting trust arises in the circumstances may be relevant  as between family members or beneficiaries of an estate, it is not applicable in the case of a third party creditor claiming against a registered interest in land. As a side note, the creditor in this case did advise the court that it did not intend to execute the judgment against the House while the mother was still living there.

Before making any changes to ownership of an asset, it is crucial to obtain comprehensive advice as to all of the possible consequences of doing so—both positive and negative. Communication regarding joint tenancy is also important. This will help ensure that all parties are aware of the assets in which they may have an interest and the nature of any such interest, so they are in a position to manage their affairs accordingly.

Thanks for reading,

Rebecca Rauws

 

Other blog posts that you may find interesting:

21 Sep

Joint Tenancy, Survivorship, and Adverse Possession

Ian Hull Estate & Trust, General Interest Tags: , , , , , , , 0 Comments

A recent decision of the Ontario Superior Court of Justice, Post Estate (Trustee of) v Hamilton, 2015 ONSC 5252 (available on Westlaw) considered a rather unusual set of facts with respect to joint tenancy and an interesting application of the equitable remedy of adverse possession.

Edward and Heather had been common law spouses several decades ago. They purchased a home together (the “home”) in 1980, as joint tenants. Three years later, Edward and Heather ended their relationship, and Heather moved out of the home they had bought together. Edward lived in the home ever since, until his death in December 2014. Heather has not been heard from since 1983.

When Edward died last year, his Estate ran into a roadblock with the home. Edward’s family had understood that the home was in Edward’s name alone, but were surprised to find that Heather and Edward still owned the home together as joint tenants. Under the law of joint tenancy, when one of the joint owners dies, the asset passes to the surviving joint tenant, by right of survivorship. Theoretically, therefore, the home should have become Heather’s property.

The wrinkle in this case was that, despite “strenuous efforts”, Heather could not be found. Edward’s Estate Trustee then brought an Application for an Order vesting title in the home in the Estate. The issue considered by the Honourable Justice MacDougall was thus, whether one joint tenant can acquire full title to property by way of adverse possession. In order to establish title by possession, Justice MacDougall stated that a party must show three things:

  • i. Actual possession for the statutory period by him/herself and those through whom s/he claims;
  • ii. That such possession was with the intention of excluding from possession the owner or person entitled to possession; and
  • iii. Discontinuance of possession for the statutory period by the owners and all others, if any, entitled to possession.

With respect to the first and third requirements, Edward had actual possession of the home by himself for 32 years, which is well beyond the 10 year statutory period required. With respect to the second requirement, the court found that, although Edward did not have a “clear and direct intention” to exclude Heather, the court can still infer a presumed intention to exclude and consequently find in favour of adverse possession. In this case, Justice MacDougall was able to infer such presumed intention due to the facts that Edward believed he had full ownership of the house, he paid all the expenses for the house for 32 years, and made mortgage payments and renewed the mortgage without Heather’s signature or agreement.

Thanks for reading.

Ian Hull

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