The client
A co-owner in Carleton Place held a $480,000 home as tenants in common at 60/40 with her co-owner, who died with a $260,000 mortgage still registered against the property.
Home value
$480,000, Carleton Place
Held 60/40 as tenants in common
Existing mortgage balance
$260,000
With the original lender
Deceased's share of equity
$88,000
Fell into his estate, not to the survivor automatically
Survivor's own income
$8,400/month
The problem
Two co-owners' names on title do not always mean the same legal result when one of them dies. A joint tenant's share passes to the survivor automatically by right of survivorship, registered with a simple Survivorship Application. A tenant in common's share does not -- it falls into that owner's estate, exactly like any other asset, and only an Application for Transmission naming the Estate Trustee can move it.
What the first attempt got wrong
- ▸The file was initially prepared assuming a Survivorship Application, the form used for joint tenants
- ▸A title search confirmed the co-owners had always held the property as tenants in common at 60/40, not joint tenants
- ▸The Land Registry would have rejected a Survivorship Application outright -- no survivorship right exists for a tenancy in common
The deceased's 40% share had to move through his estate before the survivor's switch could register at all.
The numbers
Once the correct registration path was confirmed, sizing the switch to pay off the existing balance and buy out the estate's share was straightforward arithmetic.
| Switching and buying out the estate's share | Amount |
|---|---|
| Home equity | $220,000 |
| Estate's 40% share, bought out | $88,000 |
| New switch balance | $348,000 |
| Total debt service, survivor's own income | Figure |
|---|---|
| Payment at the qualifying rate (6.65%), 25 years | $2,363/mo |
| Property tax | $340/mo |
| Heat (lender estimate) | $130/mo |
| Car loan | $260/mo |
| Total debt service | 36.8% |
36.8% clears comfortably on the survivor's own income, fully requalified at the minimum qualifying rate -- because the balance is increasing to fund the buyout, no straight-switch exemption applies here regardless of how title passed.
The solution
A mortgage agent licensed under Ontario's Mortgage Brokerages, Lenders and Administrators Act treated the registration instrument as a title question to be answered from the actual record, not from the more familiar joint-tenancy assumption.
First, pulled a fresh title search confirming the property was held as tenants in common, at a registered 60/40 split. That search, not the file's initial assumption, is what determined which form actually applied.
Second, had the Land Titles Application for Transmission registered naming the Estate Trustee, moving the deceased's 40% share into the estate's hands before any new charge could register.
Third, closed the switch and the estate buyout as one transaction, once title correctly reflected the estate's interest and the new lender's solicitor confirmed a clean chain.
The outcome
The switch funded at 4.65%, the Transmission Application registered ahead of the new charge, and total debt service settled at 36.8%.
Because this is a balance-increasing switch, it was fully requalified at the minimum qualifying rate; there is no straight-switch MQR exemption for an increased amount, regardless of how the co-owner's share passed.
What to take from this file
- 01A joint tenant's share and a tenant in common's share behave completely differently on death. One passes automatically by survivorship; the other falls into the deceased's estate.
- 02Confirm how title is actually registered before assuming which registration form applies. A Survivorship Application and an Application for Transmission are not interchangeable, and the Land Registry will reject the wrong one.
- 03An Application for Transmission names the Estate Trustee, not the surviving co-owner directly. The estate's interest has to move through the trustee before any subsequent dealing.
- 04A balance increase always requires full requalification. Whatever registration instrument applies, it has no bearing on whether the straight-switch exemption is available -- only the loan amount and amortization do.
Sources
Every regulatory figure in this file traces to one of these primary sources. Client details and anything that varies by lender are illustrative, as flagged below.
- ▸OSFI — Minimum qualifying rate for uninsured mortgages — the minimum qualifying rate — greater of contract rate + 2% or 5.25%.
- ▸Provincial/territorial mortgage-broker legislation fetched directly (bclaws.gov.bc.ca, legisquebec.gouv.qc.ca, fcaa.gov.sk.ca, web2.gov.mb.ca, nslegislature.ca, assembly.nl.ca) plus FCNB's own site for NB and CanLII's index for PE — see notes for per-province method — provincial mortgage regulators and licence titles.
Illustrative in this file — lender-specific, not rules:
- ▸4.65% contract rate — rates move daily; not a quote.
- ▸the 60/40 tenancy-in-common split — this couple's own registered split; a tenancy in common can register any percentage the co-owners agreed to.
- ▸the TDS figure — this is a balance-increasing switch, fully requalified at the minimum qualifying rate -- no straight-switch exemption applies once the amount increases.
Authority & provenance
How this case file was built
We publish the origin, the verification method and the reviewer for every case file, so you can judge how far to trust it before you rely on it with a client.
Where it comes from
Derived from files handled by Treadstone’s fulfillment desk and from scenarios contributed by partner brokerages. Names, employers, exact amounts and dates are changed so no client or file is identifiable.
Provenance: Composite — a pattern seen repeatedly on fulfilled files, not a single transaction.
What is verified
Every regulatory figure traces to a primary source listed above and was checked against it on the date shown. The arithmetic is recomputed by machine on every rebuild.
Anything that varies by lender is labelled illustrative rather than stated as a rule.
Who reviewed it
Reviewed for Canadian regulatory accuracy before publication, and re-checked whenever a cited rule changes.
Reviewed by: Nicholas Parson, Treadstone Associates — reviews every case file before publication.
This case file is professional reference material for licensed mortgage professionals. It is not advice to a borrower, and it is not a lender commitment. Insurer rules, qualifying rates and provincial taxes change — confirm the current position with the insurer, regulator or lender before you rely on any figure here in a live file.