What Are The Different Types of Property Ownership in Alberta

June 22, 2020

The 3 Different Types of Property Ownership in Alberta Include:

  1. Sole owner – one person or company owns the land

  2. Joint Tenancy or Joint Tenants – if one owner passes away, their share goes to the remaining owner(s)

  3. Tenancy In Common or Tenants in Common – if one owner passes away, their share goes to their estate

Land (also known as “real property”) is treated a bit differently than most possessions when it comes to distributing a deceased person’s estate. Most money and possessions in a person’s estate are distributed based on the instructions set out in a will or according to the “Intestate Succession Act” (the Act that governs if there is no will). Real Property is different. The law looks to how the ownership of the property is registered first to determine how to deal with the parcel of land.

  • Sole Owner

If only one person owns a property, they are a “Sole owner”. If they were to pass away while being a sole owner, their will or the “Intestate Succession Act” would be used to determine who has rights to the property.

  • Joint Tenancy or Joint Tenants

Most common use – Spouses owning property together

This is the most common type of ownership when spouses purchase a property together. Each owner automatically has an equal share of the property. If one owner becomes deceased, their share of the property would go to the other owner(s). It’s also a simpler process to transfer ownership to the surviving owner (compared to the next example).

  • Tenancy In Common or Tenants in Common

Most common use(s) – investors, friends, non-married couple owning property together

In this type of ownership, each owner owns a share of the property. This would be more common when people who aren’t married purchase a property together (whether in a formal relationship, as friends, or as investment partners). In some of these examples, it’s far less likely one owner would want their share to automatically go to the other owner. In the case of an investment, it would be more likely they would want their share to go to their estate. This type of ownership allows for that. It also allows for a determination as to the percentage share of each owner. It would be up to the owners to determine how the ownership would be listed, but here are some examples where there are two owners:

  • Two equal investor partners (each as to 50% ownership)
  • One purchaser with a parent as a co-signer (99% ownership to the owner, 1% to the co-signer)
  • Uneven investments (one owner with 33%, the other with 67%).

These are simply examples. The owners can make these percentages whatever they like regardless of why they are purchasing the property together. It’s also possible for a 50% share of a property to be held “Jointly” by two or more entities. For example, if a married couple invested equally in a property with a business partner, they might own the property as tenants in common with the business partner owning 50% and the married couple owning 50%. The married couple could own their 50% share as “Joint Tenants”. So if one of them were to pass away, the other would automatically get the entire 50% share, but if the surviving spouse were to subsequently pass, their share would go to their estate.

Other notable differences (Joint Tenants vs. Tenants In Common)

  • Mortgages – Joint tenants would need to mortgage a property at the same time (both on title, so both need to be on the mortgage). Tenants In Common are able to place a mortgage on only their percentage of ownership (albeit somewhat rare to do this). They can also get one mortgage for the whole property.
  • Transferring ownership – Joint Tenants must sell the property together. Tenants In Common are able to sell and transfer their ownership in the property to someone else without the approval of the other owner(s) (if they can find someone who wants to purchase a share of a property).
  • Tax implications & Estate planning – Each type of ownership will have different tax and estate implications depending on your situation. It’s important to speak to your lawyer & an accountant if you’re concerned about these implications.

Additional defined terms to be aware of:

  • Land Titles Office – this is the government office that is responsible for recording all registrations of land transfers and registering documents on titles.
  • Registration(s) or Registered documents – There are different types of legal documents that can be registered against a piece of land. They are each assigned their own registered document number and anyone can request a copy of any document registered at land titles (for a nominal cost). Here are some of the more common examples:
    • Right of way – this grants access to a company/person(s)/Municipality to a certain portion of someone’s property (ex. utility companies are granted a right of way to access underground pipes).
    • Encumbrance – this is a claim against a property, almost always has a financial component (ex. Homeowner’s association for their annual fees).
    • Restrictive Covenant – restricts the use of land in some way (Ex. restriction of how high you can build on that piece of land).
    • Caveat – Translated from Latin, this means “let him beware”. This means there is an agreement that “charges” the land (affects the land). There are a wide variety of items caveats could refer to (loans, agreement for sale, restrictions to the property, and more). Due to the wide variety, it’s important to obtain copies of caveats if they are present on title.
    • Land Title or Title (also known as a Deed in other locales) – This is the document that notes the legal address of the property, the owner(s)’ name(s), the type of ownership, the owner(s)’ mailing address, and a list of all the registrations on that title.
    • Transfer of Land – this is a document that gets signed by the owner of the land when they are authorizing the land be transferred to the new owner(s)’ name. The person receiving the land (or their agent) must sign a portion of the Transfer of Land that acknowledges the market value of the property at the time of the sale. This document gets registered at the Land Titles Office.
    • Dower Act – this is the legal act that governs the rights of a spouse to their “homestead” (marital dwelling)  when the other spouse is the Sole Owner of that property.
    • Mortgage – while most people have a general understanding of this term, many don’t realize their mortgage contract gets registered on their Land Title at the Land Titles Office. If someone were to request a copy of your land title, they would be able to see that you have a mortgage on your property, who the lender was, and how much it was originally registered for. They could also request a copy of the mortgage document itself at any registry or lawyer’s office (for a cost).

Note: The above information is not meant to constitute legal advice. Please consult your lawyer and/or accounting before making any final decisions.

About the Author:

Michelle Werkman is our Finance and Administration Manager at Sterling Homes. She makes sure we look at the numbers and is always striving to make us more efficient.  Michelle managed a real estate/corporate law firm for 12 years before bringing her talents to Sterling. She holds an Accounting Designation (CPA, CMA) and Bachelor of Commerce degree.  Prior to that, Michelle worked in the casino industry for nearly a decade, where she learned a lot about conflict resolution, and a bit about poker as well. Michelle has spent over 25 years volunteering for sporting events in the Edmonton area, and has 15+ years’ experience coaching soccer, hockey and basketball.  She enjoys spending time with her husband and son and tries to live by one of her favourite quotes: “It’s nice to be important, but it’s more important to be nice” – John Templeton

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