Marley v Salga and the Impact of Severing Joint Tenancy Though a Will – Written by Zachary Thiffault
Property can be held as joint tenants or tenants in common and this will determine how the property is divided when one party dies. Under joint tenancy, when one person dies the survivor automatically becomes the owner of the whole property. However, tenants in common each retain a specific percentage of interest in the property, so when one dies their share goes to their heirs as noted in a Will.
Estate planners often favour joint tenancy because it is generally accepted that joint tenancy cannot be severed by a Will. Once the Land Registry Office is advised that one tenant has died, the property will be transferred to the surviving tenant. When this occurs, the interest in the property won’t become part of the deceased’s estate, and thus not subject to claims by their heirs.
Despite being accepted as foundational principles of property law, a recent decision from the Superior Court of Ontario has potentially changed the ability to severe joint tenancy through a Will. In Marley v Salga http://canlii.ca/t/j0vr6, a married couple, Mr. Salga and Ms. Marley lived in a house they owned as joint tenants, until his 2015 death. Mr. Salga had three children from a previous marriage. Despite the property being registered as joint tenants, Mr. Salga’s Will referenced his interest in their property as an “undivided one-half interest,” language typically used to refer to tenancy in common. One question at trial was whether the wording in his Will severed joint tenancy and thus created a tenancy in common designation upon his death.
The judge acknowledged that there are accepted methods used to sever joint tenancy. He identified the appropriate method used in this alleged severance occurred through a “course of dealings sufficient to intimate that the interests of all were mutually treated as constituting a tenancy in common.” This means through some mutual agreement the parties changed how they held ownership from joint tenancy to tenants in common. The decision correctly notes that a Will alone cannot show mutual intent to sever, and requires identifying an incident that showed an intention by both parties to sever joint tenancy. This is assessed by weighing factual evidence.
In Marley, the evidence extended beyond the Will and into conversations between Mr. Salga and other parties. The judge emphasized a deathbed conversation between Mr. Salga and Ms. Marley, in which Ms. Marley acknowledged the Will’s reference to Mr. Salga’s interest in terms of tenancy in common. Ms. Marley didn’t object to this fact, instead indicating she understood what the wording of the Will meant, but not necessarily that she supported it. Nonetheless, the judge concluded from this conversation it appeared Ms. Marley understood the implications of the Will, Coupling this evidence, the Judge declared a mutual intention was found the joint tenancy was in fact severed.
This decision creates a troubling precedent by disregarding the understanding within the legal community that joint tenancy cannot be severed through a Will. In finding that a person can sever joint tenancy through a will, this decision undermines foundational understandings of real estate designations, and effectively diminishes the differences between joint tenancy and tenancy in common.
This has problematic consequences for estate planning and real estate transactions. Unless further clarification is provided, this decision will only stand to complicate these areas of law and create contentious estate administrations.
*This decision is in the process of being appealed*
If you or someone you know would like to discuss Estate Planning, contact FDTLaw at 705-526-1471 to book an appointment or speak directly with one of our lawyers.
FDTLaw, expert advice, personal service!