It is common for two or more individuals to own real estate together as co-owners. Before purchasing real estate with another individual it is important to consider what will happen if you or one of the other co-owners passes away. In this article we will discuss what happens if one co-owner of real estate passes away.

When two or more individuals own real estate, the co-owners own their respective interests in the property either as joint tenants or as tenants in common. This distinction is extremely important in determining what happens to a deceased co-owner’s interest in the property following his or her death.

1. Joint Tenancy – Co-owners who own real estate as “joint tenants” generally benefit from the right of survivorship. This means that when one joint tenant dies, the surviving joint tenant is automatically entitled to the deceased joint tenant’s interest in the property by the nature of deceased joint tenant passing away, as long as the surviving joint tenant survives the deceased joint tenant by at least five days. This is the most common form of joint ownership with spouses. The deceased joint tenant’s interest in the property may be transferred to the surviving joint tenant by way of a relatively quick and inexpensive process called a transmission to surviving joint tenant. When the right of survivorship applies, there is no need to apply to the Supreme Court of British Columbia for a grant of probate or grant of administration. Please note that there are scenarios in which the surviving joint tenant must prove that the right of survivorship was intended by the deceased joint tenant to apply (Ex. a parent who adds an adult child on title to their property).
2. Tenancy in Common – Co-owners who own real estate as “tenants in common” do not have the right of survivorship. Instead, when one tenant in common dies, his or her interest passes to his or her estate. This means that the deceased tenant in common’s interest in the property would be distributed in accordance with his or her will or pursuant to the intestacy rules in the Wills, Estates and Succession Act of British Columbia. The transfer of the deceased tenant in common’s interest in the property to his or her beneficiaries will generally be more expensive and time consuming than a transmission to surviving joint tenant. This is because a grant of probate or grant of administration will have to be obtained from the Supreme Court of British Columbia and submitted to the Land Title Office to transfer the deceased tenant in common’s interest in the property to his or her executor or administrator and then to his or her ultimate beneficiary or beneficiaries.

Please note that whether joint tenancy or tenancy in common is the appropriate co-ownership structure depends on the circumstances and is beyond the scope of this article.

There are a number of reasons why it is important to properly deal with and transfer a deceased co-owner’s interest in real estate. Some of the key reasons are summarized below:

1. If the intention is to sell the property, the deceased co-owner will need to be removed as a registered owner on title to the property prior to completion of the sale. If the real estate market is “hot” and moving quickly, delays related to transmitting and/or transferring the deceased owner’s interest in the property may affect the marketability of the property. If the deceased co-owner’s interest is held through a corporation to which the deceased co-owner is the sole director and shareholder, additional complications and delays may occur.
2. If the property is located within an region of British Columbia affected by the Speculation and Vacancy Tax (https://www2.gov.bc.ca/gov/content/taxes/property-taxes/speculation-and-vacancy-tax/taxable-regions), there is an exemption available for the recent death of an owner. However, this exemption only applies for the calendar year in which the owner dies and the following calendar year. This means that if an owner passes away in 2019, they will be exempt for 2019 and 2020. If the deceased owner is still a registered owner of the property on December 31, 2021, the Speculation and Vacancy Tax will be payable. Some estates take months if not years to wrap up. Accordingly, it is prudent to commence the estate administration process as soon as possible following the death of a co-owner.
3. Since neither a deceased person nor his or her estate can have a principal residence after death, the principal residence exemption from capital gains tax will not apply with respect to capital gains incurred after the date of death of the deceased. This is particularly important as house prices continue to rise in the Okanagan.

If you have questions regarding the implications of the death of a co-owner of real estate or the differences between joint tenancy and tenancy in common, please feel free to reach out to one of our lawyers practicing in the area of estate planning and administration at (250) 448-2637.

Author: Danielle (Dani) Brito

This information is general in nature only. You should consult a lawyer before acting on any of this information. This information should not be considered as legal advice. To learn more about your legal needs, please contact our office at (250)448-2637 or any of our lawyers practicing in the area of estate planning and estate administration at the following: