Tenants in Common Mortgage in Ontario: What If One Owner Stops Paying?

You bought a property with a friend, relative or partner, and the mortgage payments were meant to be shared. Now the other owner has stopped paying, and the lender is looking at you.

This article explains how shared mortgage liability generally works in Ontario, what the lender can do, and what options a co-owner may have. Your own charge and ownership documents matter a great deal, so treat this as a map rather than a verdict.

Owning together and owing together

Unless the transfer shows an intention to create a joint tenancy, land granted to two or more people goes to them as tenants in common, even if they are spouses. Each owner holds a share, but ownership of the land and responsibility for the mortgage are separate questions.

Where there are several chargors, the covenants implied in a registered charge, including the promise to pay the mortgage money, are made by the chargors jointly and severally, unless the charge says otherwise. In plain terms, each co-owner can be liable for the whole debt, not just half. How a private deal with your co-owner about who pays what affects the lender's claim depends on your situation, so it is worth confirming with a lawyer.

What the lender can do after a default

Lenders must follow a process before selling under a power of sale. The default must continue for at least 15 days before notice is given, and the sale cannot happen until at least 35 days after notice. Notice goes by personal service or registered mail.

During the notice period, no further proceeding to enforce the mortgage may be started without a Superior Court of Justice judge's order. The exact steps and timing in your case depend on the wording of your charge, so check it as soon as you learn of a problem.

If some of the owners hold as joint tenants rather than tenants in common, registering a charge signed by fewer than all the joint tenants does not automatically sever the joint tenancy. Severance occurs if the chargee later exercises power of sale or forecloses after default.

Your options as the paying co-owner

A mortgagor may cure a default by performing the covenant or paying the amount due, which relieves them of the consequences of the default. Many co-owners choose to bring the account current to protect the property and their credit, then deal with their co-owner separately.

If the co-owner relationship has broken down, another route is partition or sale. Joint tenants and tenants in common may be compelled to make or suffer partition or sale of the land. Any person interested in land in Ontario may bring an action or application for partition, and the court may order a sale instead if that is more advantageous.

The Court of Appeal for Ontario holds that co-owners have a prima facie right to force a sale under the Partition Act. The party resisting must show why the property should not be sold, and the court refuses only if the applicant is acting maliciously, vexatiously or oppressively. Age, illness and claimed hardship were not enough in Inniss v. Blackett.

• Where land passed by will or on intestacy, no partition proceeding may be taken until one year after the death.
• A court-ordered partition or sale is effective to convey the interests of minors and of persons incapable under the Substitute Decisions Act, 1992.
• An appeal from any order under the Partition Act goes to the Divisional Court.

Spouses and the matrimonial home

A spouse may not dispose of or encumber an interest in a matrimonial home unless the other spouse joins or consents, has released their rights by separation agreement, or a court order authorizes it. A transaction in breach may be set aside. If the home is shared with a spouse as well as a co-owner, this rule affects what can be done with a share.

If a spouse dies owning a matrimonial home as a joint tenant with someone other than the other spouse, the joint tenancy is deemed severed immediately before death. How a partition application fits with a separation depends on your situation, so it is worth raising with a lawyer early.

Whether one tenant in common can mortgage only their own share depends on legal principles worth confirming with a lawyer.

What to do next

• Get a copy of the registered charge and read who signed and what it says about liability.
• Contact the lender promptly to confirm the arrears and any notices received.
• Keep every notice and note the date and method of delivery, given the notice timelines.
• Gather any written agreement with your co-owner about who pays what.
• Track what you pay on the co-owner's behalf, with dates and proof.
• Speak with a lawyer before paying large sums, signing anything new, or starting a partition application.

Frequently asked questions