A recent Alberta case shows the dangers and potential complications of putting property in joint names as a method of estate planning to avoid probate.
What Happened?
In 1984, the property owner (“owner”) transferred a parcel of land to himself and one of his daughters, as joint tenants.
Many years later, the owner sought to sever the joint tenancy and to declare that his daughter held the property in trust for him.
In late 2009, the owner prepared and served a Notice of Intention to Register a Transfer of Land thereby announcing his intention to sever the joint tenancy under s. 65 of the Land Titles Act.
In response, on March 22, 2010, the daughter commenced her own action by Originating Notice seeking a declaration that the transfer had been an inter vivos gift, including an irrevocable right of survivorship, which could not be revoked simply because the owner had changed his mind.
In a May 2010 order, the court declared that the joint tenancy between the owner and the daughter was severed and that the property be registered as between them as tenants in common.
The parties’ counsel discussed the planned registration of the order, and efforts related thereto, as late as July 30, 2014.
However, the owner passed away on August 7, 2014.
On September 15, 2014, the owner’s other daughter (the “executor”) filed a caveat on title claiming an interest in the land as executor of the owner’s estate. The executor did not apply for probate until April 23, 2015, and was not appointed as personal representative of the estate until June 18, 2015.
On May 12, 2015, the daughter filed an “Affidavit of Surviving Tenant” with the Land Titles Office requesting that a new certificate of title be issued with her name as joint tenant deleted. The Land Titles Office issued a new certificate of title in the daughter’s sole name as the surviving joint tenant.
Parties’ Positions
The executor argued that the original order should be given effect notwithstanding the non-registration at the Land Titles Office. She further argued that the daughter obtained the transfer of the property into her name with full knowledge of the original order and contrary to the terms of that order, which conduct should not be allowed to stand.
The daughter argued that the original order did not sever the joint tenancy because it failed to fix the proportionate ownership interests of the parties as tenants in common and was never registered under the Land Titles Act. Further, the order was procedural or interlocutory in nature; it was intended to be a mere stop gap during the litigation and was not intended to resolve the ownership issues. The remaining litigation steps in the order did not occur and compliance with the litigation plan as set out in the order has been frustrated by the owner’s death. She submitted that it would be inappropriate to take the severance term out of context and enforce only that portion of the order eight years after it was made. Finally, the daughter argued that for these reasons, the court should not exercise its discretion under s. 190 of the Land Titles Act to rectify the title to the property.
Decision
The court found that the original order expressly provided that the joint tenancy was to be severed effective immediately and that order was not appealed. The court stated:
“The fact that the Land Titles Office did not register the property in the name of [the owner] and [the daughter] as tenants in common does not change the fact that the Order severed the joint tenancy as between them immediately. Orders of the court must be obeyed and respected. This is so even if an order is subsequently rescinded or reversed.”
The court also found that, even though the proportionate ownership interests were not expressly stated in the order, it was reasonable in these circumstances to infer that the owners’ interests were to be divided equally.
As a result, the court found that the original order did have the effect of severing the joint tenancy, effective May 27, 2010, notwithstanding its non-registration in the Land Titles Office.
The court also found it appropriate and just to exercise its discretion under s. 190 to order the Registrar to rectify the title to reflect what was dictated in the original order, that the parties held the land as tenants in common, as between the daughter and the executor, stating:
“Title to the entire parcel was transferred to [the daughter] on May 12, 2015. [The daughter] obtained title to the full parcel by swearing an Affidavit of Surviving Tenant despite being aware of the Order and knowing that doing so was contrary to the express terms of the Order. This Court cannot allow a party to a dispute to negate her adversary’s interests by circumventing a court Order.”
[note: This matter was subject to subsequent litigation.]
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