Joint Tenancy matrimonial home with a third party Ontario. What happens when a spouse owns a matrimonial home in joint tenancy with a third party (eg a parent or sibling) in Ontario and the spouse dies?

If a spouse owns a matrimonial home in joint tenancy with a third party, and the spouse dies, the joint tenancy is deemed to have been severed immediately before the time of death. Section 26(1) of the Family Law Act (“FLA“) provides that if a spouse dies owning an interest in a matrimonial home as a joint tenant with a third person and not with the other spouse, the joint tenancy shall be deemed to have been severed immediately before the time of death.

If the deceased owned a matrimonial home with a third party, the joint tenancy is severed to a tenancy in common immediately at the time of death. A matrimonial home” is defined in s. 18(1) of the FLA as every property in which a person has an interest, and that is or, if the spouses have separated, was at the time of separation ordinarily occupied by the person and his or her spouse as their family residence is their matrimonial home.

In Fulton v. Fulton, 1994 CanLII 1632 (ON CA), the Court of Appeal held that the literal interpretation of section 26 (1) of the FLA is to sever the joint tenancy immediately before death. The Court of Appeal held as follows:

Accordingly, the only possible conclusion was that s. 26(1) was intended to apply literally, so that where a spouse dies while a joint tenant with a person not his or her spouse in the matrimonial home, the tenancy is severed for all purposes immediately before death.

This means that in Ontario, the joint tenancy of the matrimonial home with a third party is severed to a tenancy in common. The third party and the deceased’s spouse become tenants in common, each with a 50% interest.