The Ontario Court of Appeal has clarified an issue relating to severing joint tenancy that is noteworthy for many joint property owners, lawyers and judges. This decision will impact several areas of law, including family law, real estate and wills and estates. Rule 3 is one of three ways to sever joint tenancy for joint property owners. It severs joint tenancy by “any course of dealing sufficient to intimate that the interests of all were mutually treated as constituting a tenancy in common”. Rule 3 typically governs cases where there is not an explicit agreement between joint owners, a situation that arises often after a separation. The Court of Appeal explained that “in the context of negotiations between spouses who are in the midst of a marriage breakdown, even failed or uncompleted negotiations can lead to a severance because the ‘negotiations of shares and separate interests represents and attitude that shows that the notional unity of ownership under joint tenancy has been abandoned'”.
This means that joint owners do not need an explicit agreement to treat their interest in a property as tenants in common, it is their conduct that will decide the issue.The conduct of the parties in this case included, living separately, opening separate bank accounts and consulting lawyers about dividing their interest in the property.
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