One common form of property ownership is joint tenancy, which is frequently used by spouses and family members. A defining feature of joint tenancy is the right of survivorship, meaning that when one owner dies, their share of the property automatically transfers to the surviving owner. Joint tenancy can be severed. While we have a blog explaining, generally, how that can happen. There are deeper and unresolved questions to review.
When a joint tenancy is severed it is converted into a tenancy in common. In a tenancy in common, each owner holds a separate share of the property, which they can deal with independently, and which will pass to their Estate on death.
However, severing a joint tenancy is not always straightforward. Disputes can arise as to whether a joint tenant who has passed away successfully severed the joint tenancy before death.
The stakes for the surviving owner(s) are high, as if the Court finds that the joint tenancy was not severed, the surviving owner(s) take(s) the whole of the property by right of survivorship. However, if the Court finds that the joint tenancy was severed, the deceased’s share forms part of their Estate. Depending on the value of the property in dispute, this can mean a difference of tens to hundreds of thousands of dollars.
In a prior post, we reviewed the modes of severance, briefly. Here, we will dive into the case law and unresolved questions.
Modes of Severance
The right of a joint tenant to convert a joint tenancy into a tenancy in common was recognized in Royal & Sun Alliance Insurance Company v. Muir, 2011 ONSC 2273, at para. 25 and as cited in Jackson v Rosenberg, 2023 ONSC 4403 (CanLII):
A joint tenancy can be converted into a tenancy in common. A joint tenant has the right to end the joint tenancy, which is known as a severance of the joint tenancy. Severance involves disrupting the continuance of the unities of title, interest, and possession. (The unity of time refers to the initial creation of the joint tenancy and cannot subsequently be affected.) If a joint tenant wishes to sever the joint tenancy, he or she must do so before he or she dies. In other words, it is too late to sever by testamentary disposition because with the death of the co-joint tenant, the right of survivorship would have already vested the property in the survivor.[1]
In Ontario, there are three traditionally accepted modes to sever a joint tenancy:
- Rule 1: Unilaterally acting on one’s share (ex. by selling or encumbering it).
- Rule 2: The co-owners mutually agree to sever.
- Rule 3: Any course of dealing between the co-owners that shows they mutually treat their interests as a tenancy in common.[2]
Rule 1 is commonly referred to as severance by unilateral action.
Section 41 of the Conveyancing and Law of Property Act, R.S.O. 1990, c. C.34, expressly authorizes a person to convey property to themselves.
As referenced in Jackson v Rosenberg, 2023 ONSC 4403 (CanLII), the right to sever a joint tenancy is time sensitive. A joint tenant wishing to prevent the right of survivorship must sever the joint tenancy before death, as it will be too late to do so as part of a will or other testamentary document, as survivorship vests in the surviving joint tenant at the time of death.
An issue arising from Rule 1, which has been raised, but not yet fully answered, is whether the unrealized intention to sever a joint tenancy by one joint tenant is enough to sever the joint tenancy. In essence, the Court has been asked to determine whether it is sufficient to find that the course of dealing by a deceased joint tenant evidences their intention to sever the joint tenancy, and as such, whether it was successfully severed.
Gefen Estate v Gefen
This issue was raised in the Court of Appeal decision in Gefen Estate v Gefen, 2022 ONCA 174 (CanLII).[3]
In Gefen, the Respondent, Henia, held title to a condominium with her spouse, Elias, and her son, Yehuda, as joint tenants. After her spouse passed away, the condominium vested in Henia and her son jointly.
Due to her acrimonious relationship with her son, Henia instructed her lawyer to sever the joint tenancy with Yehuda. Henia signed the severance documents, however, her lawyer failed to register the documents on title. Two years later, Yehuda passed away without knowledge of the severance documents.
After Yehuda’s death, Henia took steps to register a survivorship application on the property. However, Yehuda’s Estate challenged this registration on the basis that the joint tenancy has been severed before Yehuda’s death.
The trial judge found that Henia’s unilateral act of authorizing and directing severance was sufficient to sever the joint tenancy.
Henia appealed the judgment, taking the position that an uncommunicated intention is insufficient, absent communication, and that the severance was ineffective.
On appeal, the Court found that as the joint tenancy was severed by Rule 3 (i.e. course of dealing), it was not necessary to determine whether a declaration of unilateral intention was sufficient to sever a joint tenancy.
Notably, the Court of Appeal relied on its earlier decision in Jansen v. Niels Estate, 2017 ONCA 312, 137 O.R. (3d) 709, in which the Court stated that “it is not clear that an expression of intention is sufficient to achieve severance”.
In the earlier case of Thompson v Elliott Estate, 2020 ONSC 1004 (CanLII), the Court provided some clarity on these issues in stating that it is the delivery (i.e. execution) and not registration of the transfer which determines if a joint tenancy has been severed.[4]
Akin to Gefen, in Thompson, the deceased signed an Acknowledgement and Direction to sever the joint tenancy she held in a property owned with her husband. However, the lawyer failed to register the documents on title before her death. The Court found that that as the deceased had signed the Acknowledgement and Direction to transfer the property and gave corresponding instructions to do so immediately, the joint tenancy was effectively severed. While the transfer was not placed on title, the documents had been executed. It was the lawyer who failed to execute the transfer, effectuating the deceased’s intention.
Therefore, while there is some clarity on the unilateral severance of a joint tenancy where the severance documents are executed but not registered, there remains a question of whether an unrealized intention without execution is sufficient to sever a joint tenancy.
Against this legal backdrop, it is important for joint tenants who wish to avoid survivorship by to ensure that:
(a) an instrument affecting severance is prepared, executed, registered, and delivered without delay;
(b) an Acknowledgement and Direction authorizing registration is signed; and
c) where appropriate, records of communications that may evidence a course of dealing are documented.
Until the Ontario Court of Appeal directly resolves whether unilateral intention, by itself, can sever a joint tenancy, parties should assume that intention without executed and delivered instruments—or without a mutual course of dealing—may be insufficient.
[1] Jackson v Rosenberg, 2023 ONSC 4403 (CanLII)
[2] Hansen Estate v. Hansen, 2012 ONCA 112 (CanLII)
[3] Gefen Estate v Gefen, 2022 ONCA 174 (CanLII)
[4] Thompson v Elliott Estate, 2020 ONSC 1004 (CanLII)
Nicole Harris
Litigation Associate supporting the firm’s estate and civil litigation files, with a focus on legal research, pleadings, and motion preparation.