Can Creditors Take a Jointly Owned House After a Death in Ontario?

When one owner of a shared home dies, the survivor often fears that the deceased's debts, judgments or an insolvent estate will come after the house. The answer depends on how the home was held, why it was held that way, and what kind of debt is involved.

This article explains how survivorship, estate debts and creditor claims interact in Ontario. It is general information, and how it applies depends on your situation, so it is worth confirming with a lawyer who can review the title and the debts.

How survivorship works

Joint tenancy carries a right of survivorship, so on one owner's death the property passes automatically to the other owner. Ontario's Estate Administration Tax guidance excludes from the estate value jointly owned assets that pass automatically to the other owner. Whether a particular jointly held house is outside what the estate trustee administers depends on how it was held and the facts, so it is worth confirming with a lawyer.

By contrast, on death a person's property that is part of the estate passes to and vests in the estate trustee, who holds it for the people entitled. The estate's real property is liable for the deceased's debts, costs and expenses in the same way as personal property. The key question is therefore whether the house was truly joint, or belongs to the estate.

When a joint house can fall back into the estate

• Married spouse and a third-party joint owner: if a spouse dies owning an interest in the matrimonial home as a joint tenant with someone other than their spouse, the joint tenancy is deemed severed immediately before death, and the deceased's share goes into the estate. This applies to married spouses, not common-law partners.
• Parent and adult child: a parent's gratuitous transfer of a house into joint names with a capable adult child raises a rebuttable presumption that the child holds the property on resulting trust for the parent, which means for the estate after death.
• Dependant support: property held as joint tenants at death is deemed part of the net estate for dependant support purposes, even though it passed by survivorship.
• Simultaneous deaths: where joint owners die together or it is uncertain who survived, joint tenants are treated as tenants in common unless a contrary intention appears, and each share goes through that person's own estate.

For spouses who hold the home jointly, the fact that they hold as joint tenants is proof, without evidence to the contrary, that they intended to own it that way. For a child on title, the person claiming a gift must prove the transferor's contrary intention at the time of the transfer, on a balance of probabilities, and later self-serving evidence is treated with caution.

Insolvent estates and secured creditors

If an estate does not have enough assets to pay its debts, the debts are paid proportionately, with no preference between ranks of debt. That does not affect any lien that existed during the debtor's lifetime. A secured creditor such as a mortgage lender ranks only for the unsecured part of its claim unless the personal representative elects to take over the security, and the creditor keeps its security against the property.

A house that is part of the estate is available to pay the estate's debts, so the starting point is whether the house is in the estate at all. Whether a particular judgment, lien or tax claim reaches a share of joint property is a fact-specific question, and a lawyer should check the registrations on title.

A mortgage is the clearest example. Where the mortgage was in both names, the lender keeps its rights. If a beneficiary receives mortgaged property, they take it primarily liable for the mortgage debt unless the deceased showed a contrary intention.

Creditors, notice and the trustee

An estate trustee who has given the required notice to creditors may distribute the estate and is not liable to a creditor whose claim they had no notice of at the time. The creditor may still follow the proceeds into the hands of those who received them. This matters if a survivor also receives estate money.

If the estate sells the house, a good-faith purchaser of estate real property takes it free of claims by the deceased's creditors, except claims the purchaser knew about at the time of purchase. Keep this in mind before assuming that the sale of a shared home ends every issue between the survivor and the estate.

What to do next

• Get a current title search and confirm how the home is held.
• Find out whether the deceased was married and whether it was a matrimonial home.
• Gather records of how and why the deceased was added to or removed from title.
• List all mortgages, liens and judgments you know about.
• Do not pay unsecured debts from your own funds without advice.
• Speak with a lawyer if the estate may be insolvent.

Frequently asked questions