Jointly held assets are the bread and butter of estates litigators – despite the many good reasons for putting an asset into joint ownership, disputes are rarely far behind. Most often, it is assets held in joint tenancy that lead to problems (the most common disagreement being whether the survivor inherited the asset outright on the death of the co-owner, or whether the survivor holds the asset in trust for the deceased co-owner’s estate). However, assets held in tenancy in common have their own set of challenges.
Difficulties arose between the joint owners (as tenants in common) of a house, which required the assistance of the court to settle in Stroeder v Stroeder. The deceased and his ex-wife Beverly had owned their matrimonial home as joint tenants during their marriage. Beverly continued to live in the home after their separation and divorce. In 2008, around a year after the divorce was finalized, the deceased wrote to Beverly about having her buy out his interest in the home. Receiving no response, he had his lawyer sever the joint tenancy. (The judge did not go into details about how the joint tenancy was severed. Presumably, a deed was registered on title to the property changing ownership from joint tenants to tenants in common. However, there is more than one way to sever a joint tenancy – see the Ontario Court of Appeal’s review of the issue in Hansen Estate v. Hansen.)
After severing the joint tenancy, the deceased took no further action with regards to the house while alive. However, he left his half interest in the matrimonial home to his daughter in his will. The house was worth between $225,000-$250,000, meaning Beverly and the estate would each receive over $100,000 on its sale (the mortgage had been paid off). The estate trustee could not reach an agreement with Beverly over the sale of the house (as half-owner, Beverly’s cooperation with the sale was needed – there is little to no market for a 50% interest in a house already occupied by another person). As a result, the estate trustee brought an application under the Partition Act for an order directing the house to be sold.
Beverly argued that she would suffer a harm akin to oppression if the house was sold. She asked the court to exercise its discretion and refuse to order the sale of the home at this time. It was her position that the house was well suited to her disabilities.
The court disagreed with Beverly – it found that the house was particularly ill-suited to her needs. Beverly suffered a variety of mobility issues, and the house required her to travel up and down flights of stairs to get into the house and use the washroom. The court held that she would greatly benefit from selling the house and moving into an apartment/condominium with an elevator. In addition, the court reviewed Beverly’s finances. Given the upkeep and maintenance costs of the home, the court found that her financial situation would improve noticeably by selling the house. The court went so far as to say that a more inappropriate living situation for Beverly could not be imagined.
On the facts of the case, the court held that Beverly would suffer little hardship, and nothing approaching oppression, should the house be sold. In the result, the court ordered the house listed for sale within the next 10 days.
The deceased was able to sever the joint tenancy without Beverly’s cooperation. However, Beverly remained a co-owner of the property and, just as important, its occupant. The deceased (and his estate) faced practical challenges in realizing his interest in the property without her, or the court’s, involvement.