Why Lenders Request Joint Tenants on the Property Title: Joint Tenancy vs Tenants in Common
- Feb 20
- 3 min read
Updated: Mar 2
Understanding the conflict between lender security and your personal estate planning goals.
In Ontario, it is not unusual for lenders to request that borrowers take title as joint tenants, even when the clients are not spouses and have no intention of holding the property in that manner. This often surprises clients, because the structure of title is supposed to reflect their relationship, their contributions, and their estate planning goals — not the lender’s administrative preferences.
For clients who are friends, siblings, business partners, or extended family members, the legal difference between joint tenancy vs tenants in common is critical, as joint tenancy may be entirely inappropriate for their specific goals. It can conflict with unequal contributions to the down payment or mortgage; estate planning wishes, especially where each person wants their share to pass to their own beneficiaries; tax planning; liability concerns; financial obligations from the now prohibited NOSI and Future separation of interests, such as selling or refinancing.
“Lenders prioritize administrative ease and debt recovery; your property title should prioritize your intentions and your legacy.”
Joint tenancy automatically, even if that contradicts the deceased’s will or intentions. Many clients do not realize this until it is too late. Once exception to this general rule, is on a matrimonial home where title is held with spouse and a third person.
Lenders prefer that structure primarily to simplify the legal process of recovering the debt in case of a default or the death of a borrower, and to ensure all owners are equally and fully liable for the entire debt. Since these requirements often surface during the final stages of a transaction, having a clear understanding of your real estate closing costs and legal fees is essential to avoiding last-minute financial surprises.
Reasons and benefits for lenders in joint tenancy vs tenants in common
Joint and Several Liability: All borrowers on a joint mortgage are considered "jointly and severally liable" for the entire debt. This means the lender can pursue any one of the borrowers for the full balance of the loan, not just a portion of it. This provides the lender with maximum security and flexibility in repayment collection.
Right of Survivorship: Joint tenancy includes the "right of survivorship". If one borrower dies, their interest in the property automatically and immediately transfers to the surviving joint tenant(s), bypassing the deceased person's will and avoiding potentially lengthy probate processes. This ensures the property ownership remains with the surviving borrower(s) who are still liable for the mortgage, preventing complications that could arise if the deceased's share passed to other heirs who were not on the mortgage.
Simplified Legal Process: By avoiding probate, the property can be dealt with more quickly and efficiently in the event of a borrower's death. This continuity of ownership simplifies the lender's ability to exercise their rights (such as forcing a sale) without getting entangled in complex estate litigation or disputes among non-borrower heirs.
Clearer Control and Consent: In a joint tenancy, all owners must agree on major decisions regarding the property, such as selling or refinancing. This gives the lender assurance that no single owner can unilaterally make decisions that could jeopardize the property as loan collateral.
Reduced Risk and Increased Security: Overall, these factors make the loan a less risky proposition for the lender. Having multiple individuals with a shared, indivisible interest and total liability for the debt increases the likelihood that the mortgage payments will be met consistently.
“In Ontario, a joint tenancy can effectively overrule your Will. It is vital that your title structure matches your actual estate planning goals.”
Final Thoughts
Lenders may request joint tenancy for their own administrative reasons, but your title structure should reflect your intentions, not theirs. If the lender’s request conflicts with what you want, there are safe and practical ways to protect your interests.
Those options may include severance, tenancy in common, or co-ownership agreements. To discuss which structure is right for your specific situation, we invite you to book a consultation directly with our office.
