In an earlier blog, we canvassed the difference between joint tenancy and tenants in common. We concluded that blog with the question; what if the intention of one of the owners of the real estate changes their mind, and no longer wishes there to be an automatic right of survivorship.
How this is done is an area has been canvassed by many judges over many years in many jurisdictions. Justice Reid in 2019 in the decision of Marley vs. Salga reviewed the law on this issue. Quite frankly, the facts are so exotic and specific they do not justify repeating. (well I do anyone but very briefly below). However, the author does recommend the case as being an excellent summary of the law on this complex area.
The leading case in Ontario on severing a joint tenancy is Hansen² 2012 Ontario Court of Appeal. It reinforced the laws English roots arising from the famous 1864 decision of Williams vs. Hensman which sets out three methods by which a joint tenancy can be severed. One example is anyone of the persons operating upon his own share may cause a severance as to that share. Such an owner always has the right to sever their interest from the joint tenancy and end of course at the same time their own right of survivorship. Secondly, a joint tenancy may be severed by mutual agreement. The third alternative is there may be a severance by any course of dealing sufficiently clear that the interest of all were mutually treated as constituting a tenancy in common. There must be an express acts of severance, it is not suffice to rely on an intention or a declaration behind the backs of the other person’s interest. Chief Justice Winkler in the Hensman decision in essence reduced it down to the three rules:
- Unilaterally acting on one’s own share such as selling or encumbering it.
- A mutual agreement between the co-owners to sever the joint tenancy.
- Any course of dealing sufficient to prove that the interest of all were mutually treated as constituting a tenancy in common.
It is the last that is the most indefinite and gives rise to litigation. The normal method of severing a joint tenancy, which is definitive, is simply to convey one’s own interest to oneself. This does not require a consent of any other interested party and clearly meets rule number one set out above.
In the unique facts of the Marley vs. Salga decision, the deceased had made survivorship provisions in his Will, but that was not sufficient. More importantly, was a recorded conversation at the hospital of the parties involved in which the severance was discussed and in that unusual fact situation, the survivor appeared to agree with the abandonment of the right of survivorship.
There is great controversy over whether or not the decision is correct and nonetheless this was the decision. The case should be looked upon not so much as a precedent based upon its particular facts, but as a review once again of the important law of what it takes to sever a joint tenancy.
What is the risk if one fails to sever a joint tenancy upon separation? At times, a simple commencement of a court action has been determined to be a dealing which negates the joint tenancy. But any prudent lawyer would advise if one no longer wished the automatic right of survivorship to take place and they are willing to abandon their own potential benefit of the right of survivorship to take active steps and to sever the joint tenancy. As stated earlier, this can be done as simply as transferring one’s interest in the property onto themselves.