In Alberta’s real estate landscape, navigating property ownership can often seem like a daunting task. Nevertheless, understanding the nuances of property ownership is crucial to making informed decisions. This article aims to demystify this process by introducing the three primary types of property ownership prevalent in Alberta: Sole Ownership, Joint Tenancy, and Tenancy in Common. 

Each of these ownership types comes with its unique set of regulations, benefits, and downsides. Read on to gain a comprehensive understanding of these property ownership types to aid in your property acquisition journey.

Sole Ownership

As the name suggests, sole ownership means you’re the sole owner of the property. This is the most common type of property ownership and it’s often used by individuals who want to have complete control over their entire property. As an owner, you have full decision-making power when it comes to your property and can sell or make changes to it without consulting anyone else.

Pros of Sole Ownership

The most prominent advantage of sole ownership is the absolute control it provides. As a sole owner, you have the unrestricted ability to manage, rent, modify, or sell the property as you see fit without needing consent from any other party. This allows for quick decision-making and eliminates potential disputes that could arise in other forms of ownership.

Another benefit of sole ownership is the ease of transfer upon death. In the event of the owner’s passing, the property can be directly transferred according to the terms of a will or through intestate succession laws if there is no will. This can provide peace of mind for owners who want to ensure their property is passed down to a specific heir or beneficiary.

Cons of Sole Ownership

However, sole ownership is not without its weaknesses. One of the significant disadvantages is the financial burden that rests entirely on the owner. All expenses related to the property, such as maintenance, taxes, and mortgage payments, fall solely on the owner. This can be a considerable financial strain, particularly in the event of unexpected costs.

Additionally, in the event of the owner’s passing without a valid will, sole ownership can complicate the process of intestate succession. The property may have to go through probate, a potentially lengthy and costly legal process to determine rightful heirs. This process can cause further stress and uncertainty for the family during an already challenging time.

Joint Tenancy

Joint tenancy is when two or more owners have equal rights to the property. This type of ownership is most commonly entered into with a friend or business partner. In joint tenancy, each of the property owners has an undivided interest in the property and all owners must agree on decisions regarding the property.

Pros of Joint Tenancy

One of the main advantages of joint tenancy is the ‘right of survivorship’. This means that if one of the joint tenants dies, their interest in the property automatically passes to the surviving owners. This automatic transfer can help avoid the hassles of probate and can provide security to partners regarding their living situation.

Joint tenancy also allows for shared financial responsibility. Since joint tenants share equal co-ownership, expenses related to the property, such as mortgage payments, taxes, and maintenance costs, are divided among them. This can significantly reduce the financial burden that joint tenants might face if they were the sole owners.

Another advantage of co-ownership is the shared decision-making. Decisions about the property need to be unanimous among the owners. This can lead to better decision-making as it encourages discussion and consensus-building. This shared responsibility can foster a sense of teamwork and shared purpose, which can be beneficial in maintaining the property and making important decisions.

Cons of Joint Tenancy

Despite its advantages, joint tenancy can also come with certain disadvantages. One of the main detriments of co-ownership is the potential for disagreements between owners, as all decisions about the property must be made collectively. If one or more of the joint tenants disagrees with a decision, it can lead to deadlock situations, causing unnecessary stress and possibly legal disputes. This could be about anything from minor renovations to selling the property.

Another downside of joint tenancy is the lack of control over who can become an owner in the future. If one of the joint tenants decides to sell or transfer their interest, they can do so without the consent of the other joint tenant. This can cause tension, particularly if the other owners disagree with the new owner or if the new owner disrupts the harmony within the joint co-ownership arrangement. Additionally, in the case of one owner’s death, the property interest automatically transfers to the surviving owner(s), potentially bypassing the deceased owner’s intended beneficiaries.

Tenancy in Common

Tenancy in common is similar to joint tenancy but with some key differences. In this type of joint ownership, each owner still has an undivided interest in the property, but there is no right of survivorship. This means that if one of the tenants in common passes away, their share of the real estate property will not automatically transfer to the other tenants in common.

Pros of Tenancy in Common

One of the main advantages of tenancy in common is the flexibility it offers. Unlike joint tenancy, tenants in common can own different proportions of the property. This is significantly advantageous in situations where co-owners have contributed different amounts towards the purchase and maintenance of the property, as their ownership interests can reflect their financial contributions.

Another key benefit of tenancy in common is the independence it provides to each owner regarding their share of the property. Tenants in common have the right to sell, lease, or mortgage their interest in the property without needing the consent of the other co-owners. This can be particularly beneficial for tenants in common who may need to liquidate their share of the property owned by them for financial reasons.

Tenancy in common also provides significant estate planning advantages. Unlike joint tenancy, there is no right of survivorship in tenancy in common. This means that when a co-owner passes away, their share of the property doesn’t automatically transfer to the surviving tenants in common. Instead, it’s passed according to their will or the rules of intestate succession. This provides co-owners with greater control over who inherits their property share, allowing them to pass it to a spouse, children, or other beneficiaries of their choice.

Cons of Tenancy in Common

Tenancy in common, however, is not without its drawbacks. One of the main disadvantages is the potential for disputes among co-owners. Since each co-owner has the right to sell, lease, or mortgage their share without the consent of others, it can lead to conflicts. For example, a co-owner could sell their share to a third party, resulting in an unwanted co-owner. This decision could disrupt the harmony among the existing co-owners and potentially devalue the property.

Another downside of tenancy in common is the complexity it can add to estate planning. Without the right of survivorship, the share of a deceased co-owner does not automatically transfer to the surviving co-owners. Instead, it passes according to the deceased’s will or via intestate succession. This process can be time-consuming and costly, particularly if the will is contested or if other legal issues arise. Moreover, it can potentially lead to the property having to go through probate, which can further delay the transfer of the deceased’s share to their intended beneficiaries.

Additional Terms To Be Familiar With

As with all things real estate, it has its own language and jargon. Here are a few terms you should learn:

Land Titles Office – This government office is responsible for recording registrations of land transfers and registering documents on titles.

Registrations or Registered documents – Various types of legal documents can be registered against a piece of land. Each document is assigned a unique registered document number, and anyone can request a copy of any registered document at the Land Titles Office for a nominal cost. 

Here are some common examples:

• Right of way – Grants access to a company, person(s), or Municipality to a specific portion of someone’s property (e.g., utility companies granted right of way to access underground pipes).
• Encumbrance – A claim against a property, typically involving a financial component (e.g., Homeowner’s association annual fees).
• Restrictive Covenant – Imposes restrictions on land use (e.g., limitations on building height).
• Caveat – Translating from Latin as “let him beware,” a caveat indicates an agreement that affects the land. Caveats can refer to various items, such as loans, sale agreements, property restrictions, and more. It’s important to obtain copies of caveats if they are present in the title.
• Land Title or Title (also known as a Deed in other locales) – This document contains important information such as 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 the document that needs to be signed by the landowner to authorize the transfer of ownership to the new owner(s). The person receiving the land (or their agent) is required to sign a portion of the Transfer of Land that acknowledges the market value of the property at the time of the sale. This document is then registered at the Land Titles Office.
• Dower Act – This legal act governs the rights of a spouse to their marital dwelling (homestead) when the other spouse is the Sole Owner of the property.
• Mortgage – While many people have a basic understanding of this term, it’s worth noting that their mortgage contract is 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, including details such as the lender’s name and the initial registered amount. Copies of the mortgage document itself can be obtained from any registry or lawyer’s office (at a cost).

Note: This information is not legal advice. Consult your lawyer before making decisions.

Before purchasing a property in Alberta, it’s important to determine which type of ownership best suits your needs and goals. Whether you choose sole ownership, joint tenancy, or tenancy in common, make sure to understand the pros and cons of each type and consult with a legal professional if needed. Owning property is a big responsibility, but with the right type of ownership, it can also be a rewarding investment. So, take your time and choose wisely! Happy property hunting!

Originally published June 22, 2020, updated November 23, 2023

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