Joint Tenancy and the Perils of Not Putting It In Writing
A recent case from the Alberta Court of Appeal dealt with a dispute between two brothers regarding the ownership of a rental property in Calgary. When purchased, the property was registered in both names as joint tenants. Later on, a dispute arose as to ownership.
Basically, Eric claimed his proportionate share of the equity in the property while Lucas stated Eric was only on title to help him obtain a mortgage as he did not qualify by himself. The case was then decided on the facts that were presented by each party. Eric was able to show that he contributed to the insurance and utilities and helped make improvements to the house. He also provided monthly payments that were designed to contribute to the mortgage. Lucas stated that Eric was living on the property and his monthly contributions were merely the rent.
The Court decided there was enough evidence to support Eric’s position that he deserved a share of the property. In particular, they pointed out that each party contributed money to purchasing the property and that was prima facie evidence that each acquired ownership. It was then up to Lucas to overcome that evidence and show that Eric really only held the property as trustee for Lucas. At the initial application, the Judge had determined that Eric was not a joint tenant and held his interest in the property as trustee only for the benefit of Lucas.
This case illustrates several points.
- The mere fact that a property is held in joint tenancy is not conclusive evidence that it is shared equally between the joint owners. There is an opportunity for one party to assert complete ownership and this was successfully done by Lucas at the initial Court application.
- This entire expensive, time-consuming, stressful Court process could have been avoided if Eric and Lucas had sat down when they first purchased the property and prepared a written agreement stating exactly the nature of their co-ownership agreement. At Galbraith Law, we have prepared Co-Ownership Agreements for real estate investors and our clients find that the cost of preparing these agreements provides them with certainty and peace of mind regarding ownership. You can rest assured Eric and Lucas spent many times more in legal fees on this Court application then the cost of preparing a written agreement at the outset.
- The uncertainties of litigation. In this case, the initial application was heard by a Justice with many years’ experience who determined that Lucas was the sole owner while the Court of Appeal came to a different conclusion. While the law is clear, the complexities of people’s dealings with each other make the outcome of Court proceedings a guessing game in many cases.
Please contact us at Galbraith Law to discuss Co-Ownership Agreements or other agreements that can provide certainty and avoid mega-costly disputes.