Statutory Severance of Joint Tenancy (Ontario)
There is a provision in the Family Law Act which calls for the severance of a Joint Tenancy under certain circumstances. Frequently, it’s misinterpreted.
Section 26(1) of the Family Law Act,
Spouse without interest in matrimonial home
Joint tenancy with third person
26 (1) If a spouse dies owning an interest in a matrimonial home as a joint tenant with a third person and not with the other spouse, the joint tenancy shall be deemed to have been severed immediately before the time of death.
To fully understand this section, let’s look at an example.
The father of Bob and Bill passes away and leaves the house to his wife, their mother, Mary.
Mary leaves a Will directing that the house will be transferred to the two boys as Joint Tenants.
Mary passes away and the two boys continue to live there for some time, owing the house as Joint Tenants.
Bob gets married to Jane, who moves into the house, such that Bob’s one half interest becomes a matrimonial home.
Bill is now away at university but returns in the summers to reside with Bob and Jane.
Bob passes away.
The Family Law Act then says that the joint tenancy was severed immediately before Bob’s death. That meant it was “tenants in common” when he died. This means that Bill does not automatically inherit Bob’s interest. He would have, until Jane moved in.
This automatic statutory severance is rather paternalistic on the part of the Government. It is based upon the theory that Bob never thought about it, and he might have included Jane if he did.
That brings us to the next issue and that is if Jane happened to be on title. If she were the third Joint Tenant, then these rules would not apply. Why? The reason is that obviously Bob thought about it.
With Bob now deceased and Bill not acquiring Bob’s one half, where does it go? The answer here is Bob’s estate. Now, that may or may not result in Jane acquiring the property. It would depend upon Bob’s Will and if he had no Will, then, the laws of intestate succession.
Brian Madigan LL.B., Broker