Financial Issues between Family Members

Law

There are many ways family members can get involved with each other’s finances. The sections below describe the law around such financial matters, including:

  • Owning property together in “joint tenancy”
  • Owning property together in “tenancy in common”
  • Giving money to family members
  • Co-signing or guaranteeing a loan
  • Lending money to family members (including the effect of bankruptcy on those loans)

Please read “Who is this Information Page for?” just below to make sure you are on the right page.

For forms and templates that you can use to set up your financial affairs with a family member, choose the Process tab above.

LegalAve provides general legal information, not legal advice. Learn more here.

Last Reviewed: November 2016
Who is this Information Page for?

There are many ways family members can get involved with each other’s finances. This Information Page describes:

  • owning property together in “joint tenancy”;
  • owning property together in “tenancy in common”;
  • giving money to family members;
  • co-signing or guaranteeing a loan; and
  • lending money to family members (including the effect of bankruptcy on those loans).

In general, the law and process on this Information Page is for people who live in Alberta. This is because for Alberta law to apply, the people affected should live in Alberta and the property being dealt with should be in Alberta. If you need to deal with property that is in another province, territory, or country, please see the Ongoing Family Relationships & Out-of-Province Issues Information Page.

You are currently on the Law tab of this Information Page, which has information on what the law says in Alberta. For information on the process you need to follow to address your family-related financial issue, click on the Process tab above. There is also important information in the Common Questions and Myths tabs above.

The first topic on this page is What the words mean. Please read this section even if you think you already know what the words mean. In order to understand the resources on this page, you will need to understand the legal terms.

What the words mean

These words are not listed alphabetically—they are in the order that makes it easiest to understand the complete legal picture.

If you are looking for a specific term, you can use the Glossary, which is in alphabetical order.

property (also called “assets”)

Something that you own. Property can be:

  • “personal property,” such as bank accounts or vehicles; or
  • “real property,” such as land, a house, or a condominium.
     

joint tenancy

When 2 or more people own all of an asset together, that property is held in “joint tenancy.” Each person involved is called a “joint tenant.” For example: a joint bank account. Under joint tenancy, all of the joint tenants own all of the money in the bank account (not just their “share”). If one of the joint tenants dies, the entire account goes to the surviving joint tenant(s): the property is not part of the deceased’s estate.

tenancy in common

When 2 or more people own an asset together, but each owns a portion, that property is held in “tenancy in common.” Each person involved is called a “tenant in common.” For example: land. Under tenancy in common, each of the tenants owns a portion (or share) of the value of the land. If one of the tenants in common dies, that person’s portion does not automatically go to the other owner(s). Instead, that portion goes through the Will of the deceased.

severance (to sever)

The formal term for what happens when joint ownership changes from a joint tenancy to a tenancy in common.

borrower

A person who gets money from someone else (a “lender”), intending to pay it back. A borrower may also be called a “debtor” (see below).

debtor

A person or company that owes money to someone else. This money could be owed for:

  • a loan; or
  • goods or services that have already been received
     

creditor

A person or company that is owed money by someone. This money could be owed to:

  • pay back a loan; or
  • pay for goods or services that have already been received.
     

lender

A person, financial institution, or company that gives money to someone, intending for them to pay it back. For example: banks or credit unions. A lender may also be called a “creditor” (see above).

co-signing

Putting your name on an official document, such as a loan or contract, together with someone else. When a person co-signs for a loan, they are just as responsible for the loan as the person who borrowed the money. For example: a parent might co-sign a loan with their child. If the child misses a payment, the bank can make the parent pay back the whole loan immediately.

A person who co-signs a loan is called a “co-signer.”

Be Aware

“Co-signing” a loan and “guaranteeing” a loan are very similar concepts. Both involve becoming legally responsible for someone else’s loan if that other person is not able to pay. The difference is when you can become responsible. If you guarantee a loan, the lender must try to get payment from the borrower before going after you for payment. If you co-sign for a loan, you have agreed to be as responsible for the loan as the borrower. This means that the lender can come after you for repayment at the same time as they go after the borrower. They may even come after you before going after the borrower, but that is not common.


 

guarantee

An agreement you sign that makes you responsible for repaying someone else’s loan. You will not be responsible unless that person has missed payments or is otherwise unable to pay back the loan.

If you agree to be responsible for another person’s debt in this way, you are called a “guarantor.”

Be Aware

"Co-signing” a loan and “guaranteeing” a loan are very similar concepts. Both involve becoming legally responsible for someone else’s loan if that other person is not able to pay. The difference is when you can become responsible. If you guarantee a loan, the lender must try to get payment from the borrower before going after you for payment. If you co-sign for a loan, you have agreed to be as responsible for the loan as the borrower. This means that the lender can come after you for repayment at the same time as they go after the borrower. They may even come after you before going after the borrower, but that is not common.

collateral

Property that a borrower promises to give a lender if he or she is not able to pay back a loan.

For example: you want to take out a $100,000 loan from the bank. You use your house as collateral to get the loan. This means that the bank has the right to take (also called “seize”) your house if you aren’t able to pay back the loan.

secured loan

A type of loan where the borrower promises that if the loan is not paid, the lender can take a particular piece of property as payment. The promised property is called “security” or “collateral.” This arrangement is called a “secured loan” because the lender is secure that they will get some type of payment.

unsecured loan

A type of loan that does not require any collateral. These types of loans are more likely to be given to borrowers who have a high credit score (see below).

credit report

A report that has information about your history with loans. This report is used when you are applying for a loan from a lender. Lenders always want to know what loans you have taken out in the past and how good you were at paying them back. For example: if you took out a loan to pay for a car, but you were late on most of your payments, a lender might not want to loan you money. If you were on time with your car payments, they might be more willing to lend you money. This information will also affect the interest rates you may get.

In Canada, there are only 2 companies that provide official credit reports. They are Equifax and Transunion.

credit score

A number that is used to help lenders figure out how much money they can lend to you, if any. This number is used to predict how likely you would be to repay a debt. A low number means you would have more trouble paying the debt. As a result, if you have a low credit score, you will have more trouble finding a lender to give you a loan.

collection agency

A company that collects debts for a lender. Lenders only hire collection agencies after the borrower has missed one or more payments.

garnishment

A legal process where a lender asks a court to take money from you to repay your loan. Usually, this doesn’t happen unless you have missed several payments. However, depending on the terms of your loan, it could happen after only one missed payment.

The Court can order that the money be taken:

  • from your wages; or
  • from your bank account.

This money would then be used to pay back your debt. There are limits to the amounts that can be taken. For example, the Court cannot order that your entire paycheque go to pay the debt, or that all of the money in your bank account be taken.

When the Court orders that money be taken in this way, the Court is “garnisheeing.”

insolvent

A person is “insolvent” if they:

  • don’t have enough money to make payments on their bills and debts as they become due; or
  • don’t have enough assets and property to pay off all of their debts.
     

bankruptcy

A legal process that can be started when a person cannot pay back their debts. This is called being “insolvent.” The purpose of bankruptcy is to:

  1. allow the creditors (such as lenders) to get back as much of what they’re owed as possible; and
  2. give the debtor (the borrower) a fresh financial start.

Either the debtor or a creditor can start the bankruptcy process.

Once a person enters bankruptcy, a “trustee” is appointed to manage the person’s financial business. The trustee will use the person’s assets to pay back as much of the debt as possible.

By the end of the bankruptcy process, the bankrupt person is given a fresh start and most debts that they owe are gone.

Be Aware

Bankruptcy does not clear up all types of debt. For example: child support and student loans will still be owing after a bankruptcy.

promissory note

A written and signed promise to pay a certain amount of money to another person. A promissory note may be signed by one or more people.

A promissory note is different from an “IOU.”

  • An IOU generally just says that a debt exists, and what that amount is. It does not usually outline any conditions to the loan.
  • A promissory note usually has conditions. For example: an interest rate, a repayment schedule, and consequences if the person can’t pay back the loan.
     

“default” on a loan

Failure to pay back a loan. Defaulting on a loan means that a person has not followed the repayment schedule. For example, when someone misses a monthly payment, they have “defaulted” on that loan.

independent legal advice

Guidance from a lawyer about a contract a person wants to sign before he or she signs the contract. The lawyer makes sure that the person understands the law and legal consequences of the contract, including the person’s rights and responsibilities. In order for the advice to be “independent,” both you and the other party must have your own lawyer. You cannot both go to the same law firm.

probate (also called a “grant of probate”)

A court process to confirm that:

  • a Will is authentic (for example: not fake or forged);
  • a Will is legally sound (for example: it was not signed by a person who lacked the capacity to sign a Will); and
  • the person named in the Will as the Personal Representative has the authority to administer the Testator’s estate according to the terms of the Will (for example: the person who was named as Personal Representative still has capacity, and there is no other legal reason to not allow that person to be the Personal Representative).

To get probate, special forms must be submitted to the Alberta Court of Queen’s Bench Surrogate office.

The laws that may apply to you

As you work through family-related financial issues, you may wish to read the laws (also called “statutes” or “acts”) that apply. The laws included on this Information Page are:

Web Law of Property Act (and associated Regulations)
Government of Alberta
English

Web Civil Enforcement Act (and associated Regulations)
Government of Alberta
English

Web Land Titles Act (and associated Regulations)
Government of Alberta
English


When reading laws, you also need to know about the “regulations” associated with those laws. Each of the links above takes you to a page that lists the laws as well as the regulations that go with them. For more information on laws and regulations, see the Our Legal System Information Page.

If you plan on representing yourself in court, you will also need to know about “case law.” In general, “case law” refers to the idea that it is up to judges hearing individual cases to decide:

  1. the exact meaning of the words in the laws (called “interpretation”); and
  2. how that meaning applies to the people in those cases (called “application”).

This means that what happens in other cases can affect what happens in your case. It also means that there are cases decided before that govern how cases are decided now. For more information on case law, see the Our Legal System Information Page and the Educating Yourself: Legal Research Information Page.

Beware of financial abuse

Financial abuse happens when someone tries to use or control your money. This type of abuse can include:

  • controlling what you buy;
  • using your bank accounts without your permission (including credit cards, debit cards, or cheques);
  • taking your money for themselves;
  • not letting you work, or limiting how many hours you work; or
  • abusing a Power of Attorney.

When you are helping a friend or family member with their finances, it is very easy for financial abuse to occur. For example, being pressured or forced to sign legal documents (such as a guarantee, or a loan agreement as a co-signer) is financial abuse. Or, they may take advantage of you by refusing to repay your money.

For more information about financial abuse, see the Elder Abuse Information Page. That Information Page is about all types of abuse, but you do not have to be an older adult to experience financial abuse.

Owning property together: An introduction

One way that family members might become financially involved with each other is by owning property together.

Consider the following example.

  • You and your sister decide to live together.
  • You might buy a house together.
  • You may may also share a bank account that is meant to cover the expenses for that house.

This can have very serious legal consequences. Before doing any of this, you will want learn about your rights and responsibilities when owning property together.

This would help you understand important issues such as:

  • exactly how you can co-own the house and bank account (because there is more than one way);
  • the advantages and disadvantages of co-ownership;
  • what happens to the property if one of you dies;
  • how to end the arrangement if you want to do so; and
  • what happens if only one of you wants to end the arrangement.

Understanding all of this in advance can help you avoid legal problems later.

What is "property"?

The term “property” means both:

  • “personal property,” such as bank accounts or vehicles; and
  • “real property,” such as land, a house, or a condominium.

How property can be owned together

This Information Page explains 2 of the ways of owning property together:

  • joint tenancy; and
  • tenancy in common.

Each type of ownership has advantages and disadvantages. Understanding the different types of ownership is important, because it allows you to arrange your property in a way that best suits your needs.

Alberta’s Law of Property Act says that when real property is placed into 2 or more names, the default is that that property will be held as “tenants in common.” This is true unless it is clear that the parties intended to create a joint tenancy.

Be Aware

There are other kinds of legal arrangements where 2 or more people can be involved with a piece of property. For example: arranging a trust. These are much more complex legal structures, so you will want to consider talking to a lawyer. See the Community Legal Resources & Legal Aid and Working with a Lawyer Information Pages.

Joint tenancy

When 2 or more people own all of an asset together, that property is held in “joint tenancy.” The people who own it are called “joint tenants.”

Joint tenancy is a special legal concept that results in all of the joint tenants owning all of the property. When 2 people own something in joint tenancy, they both own all of it (not just their “share”). They each have the right to deal with all of it, any time they want (although sometimes there can be additional legal steps required). If one of the joint tenants dies, the entire asset goes to the surviving joint tenant(s). The property is not part of the deceased’s estate.

Joint bank accounts are common, but other kinds of property can also be in joint names. For example: joint land, such as a house or a condo.

Joint tenancy has its own legal consequences, advantages, and disadvantages. Although joint ownership can be very handy, it can also be very dangerous. For detailed information, see the sections starting with “Joint tenancy” below.

Tenancy in common

When 2 or more people own an asset together, but each owns a portion, that property is held in “tenancy in common.” Each person involved is called a “tenant in common.”

For example: land. Under tenancy in common, each of the tenants owns a portion (or share) of the value of the land. If one of the tenants in common dies, that person’s portion does not automatically go to the other owner(s). Instead, that portion goes through the Will of the deceased.

Tenancy in common has its own legal consequences, advantages, and disadvantages. For more information, see the “Owning property together: Tenancy in common” section below.

Be Aware

Alberta’s Law of Property Act says that when real property is placed into 2 or more names, the default is that that property will be held as “tenants in common.” This is true unless it is clear that the parties intended to create a joint tenancy.

Joint tenancy: Bank accounts

Joint bank accounts belong to 2 or more people. Under joint tenancy, all of the joint tenants own all of the money in the bank account (not just their “share”).

If you are considering owning property “jointly” with a family member, it is important to understand the legal consequences, advantages, and disadvantages of this kind of ownership. Although joint ownership can be very handy, it can also be very dangerous.

A few of the of the most important aspects of having a joint bank account are discussed below.

Be Aware

Being a joint tenant has many serious legal consequences, both during your life and after. Before you put property into joint names, be sure you understand the rights and powers of joint tenants and be sure that is what you really want. Consider getting legal advice. For more information, see the Community Legal Resources & Legal Aid and Working with a Lawyer Information Pages.

Complete access by both owners

If you and your relative decided to open a joint bank account, you would both own all of the money in that account. This means that either one of you could deal with the account at any time—you do not need permission from the other. This can be handy, because things can be done quickly with only one person needing to be involved.

However, this can also be dangerous. The other account owner can use all of the money in the account without your permission, leaving you with an empty account. Or, the other owner could have the bank statement sent to him or her instead of you, or choose to have the statements emailed instead. If that occurs, you may never know what is going on with the bank account. As joint tenants, both of you are legally allowed to do these things.

This can leave you very open to abuse. We generally trust our loved ones, but sometimes we can be wrong to do so. Anyone might be tempted to take advantage of the situation, because it can be so easy to simply “borrow” a little money. (See the “Beware of financial abuse” section above.)

Be Aware

You may be able to protect yourself from this risk by how you set up the account. You can request to have a signature agreement that requires more than one person to sign for any withdrawal or changes to the account.

Risk related to claims

There could a legal claim brought against one of the joint tenants. Because each of the joint tenants owns all of the money in the bank account, the entire account may be tied up in the action. For example, if your joint tenant is involved with property division during a divorce, or declares bankruptcy, you may not have access to your money until the claims get settled.

Right of survivorship

If there are 2 joint tenants and one of them dies, the other joint tenant immediately becomes the sole owner of the account. If there are more than 2 joint owners, the account continues as a joint account held by the remaining owners. The money would not pass through the deceased’s Will, even if they wanted it to.

This can be an advantage, as the surviving joint tenant will get the money immediately. Also, the money will not go to pay off any debts of the deceased joint tenant.

However, this can be a disadvantage if the deceased joint tenant wanted to leave their share of the money to someone else. For example: 2 sisters have a joint bank account. One sister cannot gift some of this money to her son after she dies. Once she dies, the other sister becomes the sole owner of the money.

Using joint accounts to try to avoid probate

Sometimes people use joint property as a way of leaving property to a loved one. When you have a bank account in joint tenancy, both of you own all of the money. When you die, your name can be removed from bank account, and the other joint tenant becomes the sole owner. Similarly, if the other owner died before you did, you would immediately become the sole owner. With property owned in joint tenancy, including bank accounts, the property does not pass through the deceased’s Will. This can be helpful if that is what you want.

However, simply using a joint account as a strategy to avoid probate may not be the best decision. Putting a bank account into joint names does not necessarily mean that a Will won’t still need to be probated. For example:

  • With “large” sums of money in any bank account, banks often have a policy that says that they will not release the funds until they have proof of probate.
  • Sometimes, a bank will also take this approach with a joint account and deny the surviving joint tenant access to the account until there is proof of probate. If this happens, a lawyer may be able to help.

Ending a joint tenancy on a bank account

A joint tenancy with 2 owners automatically ends when one of the joint owners dies. At that point, the surviving owner becomes the sole owner of the funds in the bank account. If there are more than 2 joint owners, the account continues as a joint account held by the remaining owners.

It is also to possible to end the joint tenancy while the owners are alive. This is called “severing.” Joint tenancy can be severed in 2 ways:

  • by agreement between the owners; or
  • without an agreement between the owners (by going to court).

Ending a joint tenancy by agreement

If all of the joint tenants agree, you can fill out the paperwork with your bank to end the joint tenancy of the account. You will also have to agree about how to divide the funds in the account.

Ending a joint tenancy without agreement

Joint tenancy can end without agreement. One joint tenant can apply to the Court to sever the joint tenancy. The Court can grant this request, even if one of the joint tenants does not want the severance to happen.

This can be quite complicated. You may want to speak with a lawyer about your legal options. See the Community Legal Resources & Legal Aid and Working with a Lawyer Information Pages.

More information

For more information about joint accounts, see the following resources.


Web Joint accounts
Government of Canada
English

Web Joint Tenants or Tenants in Common?
Public Legal Education Association of Saskatchewan
English
This resource is from outside Alberta. Learn more here.

Web Joint Accounts and Survivorship Rights
Advisor Group
English
This is a private source. Learn more here.

Web Joint or Separate Accounts? That is the Question
Young and Thrifty
English
This is a private source. Learn more here.

Web Do's and don'ts of joint credit
CreditCards.com Canada
English
This is a private source. Learn more here.]

Web Joint Accounts and Survivorship Rights
Advisor Group
English
This is a private source. Learn more here.

Web The Trouble With Joint Bank Accounts
Huffington Post Canada
English

French resources:



Web Compte conjoint
Government of Canada
French
Joint tenancy: Land

When 2 or more people own all of an asset together, that property is held in “joint tenancy.” The people who own it are called “joint tenants.”

If you are considering owning property “jointly” with a family member, it is important to understand the legal consequences, advantages, and disadvantages of this kind of ownership. Although joint ownership can be very handy, it can also be very dangerous.

In law, the word “land” includes buildings attached to the land, such as houses and condos. A few of the of the most important aspects of owning land as joint tenants are discussed below.

Be Aware

Being a joint tenant has many serious legal consequences, both during your life and after. Before you put property into joint names, be sure you understand the rights and powers of joint tenants and be sure that is what you really want. Consider getting legal advice. For more information, see the Community Legal Resources & Legal Aid and Working with a Lawyer Information Pages.

Equal responsibility: What affects one, affects the other

When 2 or more people jointly own an asset, they each own all of the property (not just their “share”). This is different from owning property as tenants in common, which is when each person owns just their share.

As a result, when one owner does something that puts the land at risk, the other owner shares that risk. However, unlike bank accounts, when joint tenants deal with land, they generally cannot each deal with it separately.

For example:

  • A brother and sister own a home together.
  • The brother wants to use the home to get a loan.
  • To use the home to secure a loan, both owners must agree to the loan. Then both are also responsible for that loan (even if only the brother used the money from the loan).

Similarly, if one of the joint tenants wants to sell the property, they cannot only sell their share. The whole property might have to be sold. If your joint tenant thinks it would be best to sell the home, but you don’t want to, the joint tenant can apply to a court to force a sale of the house. A court could grant that request, even if you disagree. No matter who “wins” in court, the financial and emotional results could be devastating.

Risk related to claims

There could a legal claim brought against one of the joint tenants. Because each of the joint tenants owns all of the land, the situation can become quite complicated. For example, if a joint tenant is involved with property division during a divorce, or declares bankruptcy, the land can be at risk in that legal process. This means that you may not be able to deal with your land for quite a while. Some claims can take a long time to settle. Or, the land may have to be sold, even if you don’t want it to be sold, so that the other person can get some money to settle their legal issue.

Right of survivorship

If there are 2 joint tenants and one of them dies, the other joint tenant immediately becomes the sole owner of the property. If there are more than 2 joint owners, the property continues to be held jointly by the remaining owners. The property would not pass through the deceased’s Will, even if they wanted it to.

This “right of survivorship” could be a disadvantage if the deceased joint tenant wanted to leave their share of the property to someone else. For example:

  • Two sisters, Jane and Emily, own a house in joint tenancy.
  • Emily can’t decide if she wants to gift her share of the house to her son, Robert, after she dies. So she doesn’t arrange to include Robert as another joint owner.
  • Emily dies, and Jane becomes the sole owner of the house.
  • Robert cannot simply take Emily’s position as a joint owner to the house.
  • Jane has sole ownership, so she can do whatever she wants with the property. If Emily has asked Jane to make Robert a joint tenant after she died, Jane would not have to do this.

Using joint property to try to avoid probate

Sometimes people use joint property as a way of leaving property to a loved one. When you transfer a piece of property into joint tenancy, both of you own all of the property. When you die, your name can be removed from the title (the legal document describing the property) and the other joint tenant becomes the sole owner. Similarly, if the other owner died before you did, you would immediately become the sole owner. With joint property, the property does not pass through the deceased’s Will.

Because of this, property that is in joint names does not need to be probated. As a result, people might use joint tenancy as a way of trying to avoid probate. They believe that avoiding probate is a good thing. However, many people do not really know what probate is. Also, putting one piece of land into joint names does not necessarily mean that a Will won’t still need to be probated. Whether or not a Will has to be probated depends on many things.

Before you can make any decisions to try to avoid probate, you will need to understand what probate is and how probate can sometimes be a good thing. For more information, see the Planning for Death Information Page.

Ending a joint tenancy of land

As described above, a joint tenancy with 2 owners automatically ends when one of the joint owners dies. At that point, the surviving owner becomes the sole owner of the asset or property. If there are more than 2 joint owners, the property continues to be held jointly by the remaining owners.

It is also to possible to end the joint tenancy while the owners are alive. This is called “severing.” Joint tenancy can be severed in 2 ways:

  • by agreement between the owners; or
  • without an agreement between the owners (by going to court).

Ending a joint tenancy by agreement

Joint tenancy of land can end by agreement. For example:

  • the owners can sell the property to someone else and split the money;
  • one owner can buy out the other owner; or
  • they can agree to become "tenants in common" (see the “Owning property together: Tenancy in common” section below for more information about that).

In any of these cases, the people involved would have to register a transfer at the Land Titles Office and pay a transfer fee. For more information about this, see the Process tab of this Information Page.

Ending a joint tenancy without agreement

Joint tenancy of land can end without agreement. One joint tenant can apply to the Court to sever the joint tenancy. The Court can grant this request, even if one of the joint tenants does not want the severance to happen. The Court can also find that the owners have already severed the property (or shown an intent to sever) by the way they have acted.

This is a very complex area of law and it can take joint tenants by surprise. If you are thinking about severing a joint tenancy, or you are concerned that the other person might want to do so, consider talking to a lawyer. For more information, see the Community Legal Resources & Legal Aid and Working with a Lawyer Information Pages.

More information

For more information about holding land in joint tenancy, see the following resources.

Web Joint Tenancy and Tenants In Common
Canham Rogers, Chartered Accountants
English
This is a private source. Learn more here.

Web Joint tenants vs. tenants-in-common
Estate Law Canada
English
This is a private source. Learn more here.

Video Joint Ownership
Ronald H.A. van der Steen (via LegalTube)
English
This resource is from a private source outside Alberta. Learn more here.

Web The pitfalls of joint tenancy
Advisor Group
English
This is a private source. Learn more here.

Web Joint Ownership can be Tricky
Wealth Estate Law Group
English
This resource is from a private source outside Alberta. Learn more here.

Web Joint and Common Tenancies
Duhaime.org
English
This resource is from a private source outside Alberta. Learn more here.


PDF Estates: Out of the Ordinary Problems: Joint Tenancy
Continuing Legal Education Society of British Columbia
English
This resource is from outside Alberta and can be a challenge to read. Learn more here.

For information about ending (“severing”) a joint tenancy, see the following resources.

Web Terminating a Joint Tenancy
LegalMatch
English

Web Severance of Joint Tenancies
R. Trevor Todd
English
This resource is from a private source outside Alberta. Learn more here.

Web Severing Joint Tenancy Through a Course of Dealing
Clark Wilson LLP
English
This resource is from a private source outside Alberta. Learn more here.
Owning property together: Tenancy in common

Tenancy in common describes a situation where 2 or more people own an asset together, but each owns a portion of the property. Each person involved is called a “tenant in common.”

If you are considering owning property as tenants in common with a family member, it is important to understand the legal consequences, advantages, and disadvantages of this kind of ownership. Some of the most important aspects of being tenants in common are discussed below.

Be Aware

In Canada, bank accounts are generally not held in tenancy in common. As a result, this Information Page only discusses holding “real property” (land) in tenancy in common.

Separate responsibility

A tenancy in common allows co-owners to decide the specific share that each person owns. For example, you can decide to split the property evenly between all of the owners. Or, you could have one person own 25%, and the other person own 75%. Or any other division that suits your situation.

This can be useful in many cases. For example: 2 people buy a house together, but one pays much more than the other. They can make the amount that each of them “owns” be the same as the amount of the money that each of them put into the property.

Also, being a tenant in common allows each owner to handle their share of the property as they see fit. There is no need to get permission or any kind of agreement from the other owners. In such a case, each co-owner can sell or keep their share of the property. The other owners might not always like the decisions, but legally there is nothing they can do about it.

For example:

  • You live in a house that you co-own with your sister as tenants in common.
  • You recently got married and have decided to buy a house with your spouse.
  • You decide to sell your share of the first house to your brother.
  • Your sister cannot prevent that sale from happening, because it is your decision what you would like to do with your share of the property.

Of course, this can also be a disadvantage for the other co-owner. This can lead to unpredictable situations that you don’t have much control over. In the example, the sister may not get along with the brother and may not want to live with him. However, because you own the house as tenants in common, you have no legal obligation to get her permission before you decide to sell your share to your brother.

Right to leave the land to anyone you want to in your Will

As a tenant in common, you can use your Will to leave your share of the property to anyone you choose. Unlike with joint tenancy, the other owners would not automatically get ownership of all of the property when you die.

Ending a tenancy in common

You can end a tenancy in common in 2 ways:

  • selling your share; or
  • “judicial partition.”

Selling your share

To end a tenancy in common, a co-owner can sell their share. This includes:

  • selling their share to the other owners; or
  • selling their share to someone else.

When people first buy a property, they often come up with an agreement about any future selling. For example: 3 people own land as tenants in common. They can agree that any person who wants to sell must first offer their share to the other 2 owners before selling to a stranger.

Judicial partition

If the co-owners cannot agree on how to end the tenancy in common, any of them can apply to a court for a “judicial partition.” This means that a judge would decide how the property is to be divided. There are 2 kinds of judicial partitions:

  • Partition in kind: The land is physically divided between the co-owners. This is not always possible, as there may be land use bylaws that won’t allow it.
  • Partition by sale: The Court orders the property to be sold and the profits to be divided among the co-owners. The portion each gets would match the share of the land that each owned.
Be Aware

Ending a tenancy in common can be complicated and there is more than one way to do it. A lawyer can give you advice about which method is best in your case and can make sure the proper steps are followed. For more information, see the Community Legal Resources & Legal Aid and Working with a Lawyer Information Pages.

More information

For more information on tenancy in common, see the following resources.

Web Tenants in Common for Real Estate Ownership
About, Inc.
English
This resource is from a private source outside Alberta. Learn more here.

Web Terminating a Tenancy in Common
LegalMatch
English
This resource is from a private source outside Alberta. Learn more here.
Helping family members with financial issues: An introduction

Sometimes, family members wish to help loved ones with financial troubles. There are different ways that family members can give such help. For example:

  • simply giving money;
  • lending money; or
  • helping a loved one get a loan from a lender (such as by co-signing or guaranteeing a loan).

Each of these ways of helping comes with their own advantages and disadvantages. Each has some legal issues to consider. If you are thinking about giving or accepting financial help from friends and family, it is important to understand:

  • the options you have; and
  • the steps you can take to help avoid legal problems later.
Helping family members with financial issues: Giving money

You may want to give a gift of money to a family member, which would allow them to borrow less money from a bank.

For example:

  • Your child wants to purchase her first car.
  • The car costs $10,000 and she currently has $5,000 in savings.
  • This means that she would need to borrow $5,000 to buy the car.
  • If you give her $2,000, she would only need to borrow $3,000 to buy the car.

Simply making a gift of money, rather than lending, means 2 things:

  • you will not get the money back; and
  • you cannot control how someone spends the money that you have given them. Once you give someone money, they can do whatever they want with it. This means that they don’t have to spend it the way you want them to, or the way they said they would.
Helping family members with financial issues: Co-signing or guaranteeing a loan

What is “co-signing” or “guaranteeing”?

When a person “co-signs” a loan for a person who is borrowing money (a “borrower”), it means that they are agreeing to be as responsible for the loan as the borrower is.

When a person “guarantees” a loan for a borrower, it means that they are agreeing to pay back the loan if the borrower does not pay off the loan as planned.

Both co-signing and guaranteeing involve becoming legally responsible for someone else’s loan if they are not able to pay. The difference is when you can become responsible.

  • If you co-sign for a loan, you agree to be as responsible for the loan as the borrower. This means that the lender can go to you for repayment at the same time as they go to the borrower, or even before going to the borrower.
  • If you guarantee a loan, you agree to pay off the rest of the loan if the borrower is unable or unwilling to. This means that the lender must try to get payment from the borrower before coming to you for payment.

Why might co-signing or guaranteeing be required?

Banks and other organizations that lend money (lenders) do not like to lend that money unless they are reasonably sure that the borrower will be able to pay back the loan. To figure that out, they look at the borrower’s past credit history.

A lender might not be very willing to lend money if:

  • the borrower has never taken out a loan before (such as if they are a young person); or
  • the borrower does not have a good record of paying back loans.

In such cases, the lender will want someone to co-sign or guarantee the loan. This reduces the risk the for the lender because they can collect the money from another person if the borrower can’t pay them back.

What is a “secured” loan?

A lender wants to be sure that a borrower will pay back the loan. The borrower can promise that if the loan is not paid, the lender can take a particular piece of property as payment. The promised property is called “security” or “collateral.” This arrangement is called a “secured loan” because the lender is secure that they will get some type of payment.

For example:

  • Your son takes out a loan to buy a car.
  • The car is used as security (or “collateral”) for the loan.
  • Your son cannot make the payments.
  • The lender can take back the car to help pay for the loan.

In some provinces, if the lender takes back the property that was used to secure a loan, the borrower will not be responsible for anything more. In other words, the lender could not go after the borrower for anything else. Not even if the car is worth less than the amount that was still owing on the loan. This is not the case in Alberta.

In Alberta, if the value of the security does not cover the debt, the lender may also sue for any money still owing, including interest and costs.

If you are a co-signing or guaranteeing a loan, you might put up property of your own as security. If necessary, the lender can then sell that property to make the money needed to pay off the loan. In other words, you could lose the property if you are unable to repay the loan. Also, if the property is not enough to cover the amount you owe, the lender can still go after you for the rest.

What does a co-signer or a guarantor agree to?

If you co-sign or guarantee a loan, you agree to pay back the loan if the borrower does not do so.

In general, this is a responsibility that lasts until the loan is repaid. In most cases, this means that once you co-sign for the loan, you cannot be removed from it. In some cases, the contract can say that the co-signer can be removed from the loan at some point. For example: after the borrower has paid back a certain amount, or if the borrower has made consistent payments for a certain amount of time. People who co-sign can ask a lender to include such a clause in the contract, but the lender does not have to do so.

By co-signing or guaranteeing a loan, you may also become responsible for additional money that the borrower may borrow from that lender later. For example:

  • Some contracts include clauses that make you responsible for the current loan, and also for amounts that the person borrows from the same lender in the future.
  • This can also happen if you guarantee the amount owing on a credit card. If the borrower makes more purchases, the amount will increase. And any interest and fees will also get added to the amount owing.

To avoid such situations, you could ask to place a limit on the amount that you would be responsible for. Again, the lender does not have to agree to this.

Be Aware

It does not matter why payments are missed. Even if the borrower forgot one payment, or missed a payment because they were ill, a lender can still seek repayment from you.

Co-signing or guaranteeing a loan is a serious commitment. It is important to make sure that:

  • both you and the borrower understand the loan agreement; and
  • you are prepared to repay the loan if needed.

You may want to make a plan with the borrower about what they should do if they start having trouble repaying the loan.

Often, loan agreements contain very technical language. As a result, you may want to speak with a lawyer, who can advise you on what the loan agreement involves. Also, if you are guaranteeing a loan, you will be required to get legal advice. For more information, see the Community Legal Resources & Legal Aid and Working with a Lawyer Information Pages.

The Guarantees Acknowledgment Act

Under Alberta’s Guarantees Acknowledgment Act, when a person guarantees a loan, they must first meet with a lawyer. The lawyer must be satisfied that the person signing the guarantee:

  • is aware of the terms of the guarantee; and
  • understands it.

The lawyer must then sign a certificate that states this. There will be fee. For ways to find a lawyer, see the Process tab of the Working with a Lawyer Information Page.

Getting a lawyer’s certificate is not required when co-signing a loan.

What to expect if the borrower misses a payment (“defaults”)

If the borrower fails to make payments, the lender will look to you for repayment of the loan. This can lead to several other negative consequences, including:

  • being responsible to pay back the entire loan at once (instead of on the original repayment schedule);
  • dealing with collection agencies;
  • garnishment
  • court action; and
  • effects on your credit report.
Tip

If you realize the borrower is having problems repaying a loan, it is a good idea to deal with the problem as soon as possible. Consider talking to the lender. They may not be willing to discuss any kind of change to the payment plan, but it is worth a try.

Being responsible to pay back the entire loan at once: “Acceleration clauses”

If the borrower fails to make payments, the lender will look to you for repayment of the loan. Sometimes a lender might let you pay back the loan by continuing to follow the repayment plan. However, some loan agreements have an “acceleration clause.” This clause allows the lender to demand that you pay the entire balance of the loan right away.

Collection agencies

A collection agency is a company that collects debts for a lender. Lenders only hire collection agencies after the borrower has missed one or more payments. The lender can hire a collection agency to go after:

  • the borrower;
  • the co-signer; or
  • the guarantor.

For more information about collection agencies, see the following resource.

PDF Collection Agencies
Centre for Public Legal Education Alberta
English

Garnishment

If you don’t pay back the loan, the lender can ask a court to take money from you to repay your loan. The Court can order that the money be taken:

  • from your wages; or
  • from your bank account.

This money would then be used to pay back the debt. There are limits to the amounts that can be taken. For example, the Court cannot order that your entire paycheque go to pay the debt, or that all of the money in your bank account be taken.

Court action

If you cannot repay the loan, the lender can sue you for any amount of the loan that isn’t paid back.

Remember

In Alberta, this is true even if the loan was secured. If the amount of collateral was not enough to repay the original loan, you and the borrower can be sued for the remaining amount.

Court action generally only happens after the lender has already taken other steps to try to get repayment from you. For example, they could have passed your file onto a collection agency before trying to take legal action.

Effect on your credit report

If the borrower stops paying or is late with payments, the failure to pay may show up on your credit report right away. If you cannot repay the loan yourself, your credit report will be even worse.

For more information about credit reports, see the following resource.

PDF Your Credit Report
Government of Alberta
English

More information

For more information about co-signing loans, see the following resources.

Web Your Rights And Your Risks When You Sign for a Loan
Loans Canada
English
This is a private source. Learn more here.

Web What Does it Mean to Co-Sign a Loan?
Canadian Imperial Bank of Commerce
English
This is a private source. Learn more here.

Web Co-signing or Guaranteeing a Loan
Canadian Bar Association - British Columbia Branch
English

Web Think twice before you co-sign a loan
The Globe and Mail
English

Web Cosigning a Loan – Understanding the Reasons & Risks
Money Crashers
English
This is a private source. Learn more here.


Web The Risks Of Co-Signing A Loan With Your Kid
Forbes Media
English
This is a private source. Learn more here.

PDF What Creditors Can Do If You Don't Pay
Government of Alberta
English

Web You Cosigned a Loan, They Defaulted. What Now?
U.S. News & World Report
English
This is a private source. Learn more here.

For more information about guaranteeing loans, see the following resources.

Web Co-signing or Guaranteeing a Loan
Canadian Bar Association - British Columbia Branch
English

Video Understanding Personal Guarantees
Kahane Law Office
English
This is a private source. Learn more here.
PDF What Creditors Can Do If You Don't Pay
Government of Alberta
English

Web Personal Guarantees for Corporate Loans
Patriot Law Group
English
This is a private source. Learn more here.

Web A Banker Asked Us: Joint and Several Guarantees
Gowling WLG
English
This is a private source. Learn more here.

PDF Being a Guarantor in Alberta
Centre for Public Legal Education Alberta
English
Note: This booklet has good general information. However, the Guarantees Acknowledgment Act changed in 2015. As a result, some of the information in this booklet is not longer accurate. The resources below have more information about the 2015 changes.

For more information about 2015 changes to Alberta’s Guarantees Acknowledgment Act, see the following resources.


Video Understanding Personal Guarantees
Kahane Law Office
English
This is a private source. Learn more here.

PDF Changes to the Alberta Guarantees Acknowledgment Act
Parlee McLaws LLP
English
This is a private source. Learn more here.
Helping family members with financial issues: Lending money

Sometimes, friends or family members help each other out by lending each other money.

Risks and advantages

There are both risks and advantages involved with borrowing money from family and friends, or lending money to family and friends.

Possible advantages for the person borrowing the money include the following.

  • You won’t risk getting a bad credit report. This is because, if you have trouble repaying the loan, there will no formal record of that.
  • You will not need to ask anyone else to take any risk for you by asking them to co-sign or guarantee a loan for you.
  • You could get a lower interest rate. This is because a loved one is not usually as concerned about profit as a bank is.
  • You might arrange a longer term for repayment than a bank might offer.
  • It may be easier to deal with unexpected circumstances. This is because a loved one might be more willing than a bank to extend deadlines, be flexible, or forgive a missed payment.

Possible disadvantages for the person borrowing the money include the following.

  • The loan will not help build your credit score. This is because there will be no record of you borrowing the money and making your payments on time.
  • You risk damaging your personal relationship if something unexpected happens with the loan.
  • You could end up getting sued by your loved one if you don’t repay the loan.

Possible disadvantages for the person lending the money include the following.

  • You may lose your money.
  • You may not get your money back for a long time.
  • Not having access to the money can affect your own life. For example, it may delay some of the other financial decisions you have to make.
  • You risk damage to your relationship if anything goes wrong with the loan.
Be Aware

If the borrower declares bankruptcy, this can also affect you as a lender. See the “Lending money to friends and family: What happens if a borrower declares bankruptcy” section below for more information about this.

Protecting the parties

Given all the risks, it is a good idea to make sure everyone knows exactly what is involved. A few steps you can take to protect yourselves include:

  • discussing all the terms in advance, including the interest rate and the repayment schedule; and
  • planning for what will happen if the person borrowing money has trouble following the repayment plan.

You will also want to consider putting your agreement in writing. A written agreement helps everyone involved to understand their expectations, rights, and responsibilities. This can be done by creating a “promissory note.”

A promissory note is a written and signed promise to pay a certain amount of money to another person.

It often includes information such as:

  • What are the legal names of the borrower and lender?
  • Is the loan secured or unsecured?
  • What is the amount of the loan?
  • What is the interest rate?
  • How much is each payment, and how often must payments be made?
  • By what date does the loan have to be paid off?
  • What are the consequences if the borrower cannot pay back the loan?

A promissory note is different from an “IOU.”

  • An IOU generally just says that a debt exists, and what that amount is. It does not usually outline any conditions to the loan.
  • A promissory note usually has conditions. For example: an interest rate, a repayment schedule, and consequences if the person can’t pay back the loan.
Tip

There are sample promissory notes on the Process tab of this Information Page.

Before signing the promissory note, you may each want to consider getting independent legal advice. See the Working with a Lawyer Information Page.

Be Aware

You might also need to see an accountant. Depending on the kind and size of the loan, there may be serious tax consequences. For more information, see the “Other professionals who can help” section of the Community Legal Resources & Legal Aid Information Page.

More information

For general information about loans between loved ones, see the following resources. Note that these resources are from private sources. Learn more here.


Video Tips for borrowing and lending to friends & family
Royal Bank of Canada
English


For more information about things to consider when lending money to loved ones, see the following resources. Note that these resources are from private sources. Learn more here.

Web Lending to friends and family: Your 4-step guide
CreditCards.com Canada
English


Web Lending Money to Your Children
Canadian Imperial Bank of Commerce
English



For more information about things to consider when borrowing money from loved ones, see the following resources. Note that these resources are from private sources. Learn more here.


For more information about what can happen when lending money goes wrong, see the following resources. For information about what happens if the borrower declares bankruptcy, see the “Lending & borrowing: What happens if a borrower declares bankruptcy” section below.


Web When is a Contract between Family Members Enforceable?
ABlawg
English
This resource can be a challenge to read. Learn more here.

Web If my parents lend me money, do I have to repay it after they die?
Estate Law Canada
English
This is a private source. Learn more here.

Web A Family Gift or a Loan?
Feldstein Family Law Group
English
This resource is from a private source outside of Alberta, and can be a challenge to read. Learn more here.
Lending & borrowing: What happens if a borrower declares bankruptcy

Sometimes, loans or other financial obligations become too much for a person to handle. They may become “insolvent” and they consider filing for bankruptcy as a way to get a fresh start. This section explains bankruptcy and insolvency, and what happens if someone you have lent money to files for bankruptcy.

What is bankruptcy and insolvency?

Being “insolvent” means that you owe more money than you have. This means that, even if you used all of your money and property to try to pay back all of your loans, you would still have debt.

When people are insolvent, they may file for bankruptcy, but they don’t always have to. Not all people who are insolvent file for bankruptcy.

You can only file for bankruptcy if you are insolvent. That is, the amount you owe in loans is more than the amount that you have. By filing for bankruptcy, you are saying that:

  • you are unable to pay off all of your loans; and
  • you need help getting out of your financial situation.

Once you declare bankruptcy, a “trustee” is appointed to manage your financial business. The trustee will take control over your property and will:

  • figure out how much you owe;
  • figure out how much money the lenders will get (they can’t get all they are owed, because there is not enough money to go around); and
  • use your property to pay back as much of your debt as possible.

While the trustee is doing all of this, your lenders must stop all of their attempts at collections, and any lawsuits against you.

Bankruptcy is intended to give you a fresh start. By the end of the bankruptcy process, most of the debts you owe will be gone.

What happens to the money that was loaned?

Filing for bankruptcy means that the bankrupt person does not have the money to pay back all the money they owe. As a result, not everyone who lent the borrower money is going to get back all of the money they lent. Instead, lenders often only get back a percentage of what is owed to them. Sometimes, they get nothing.

There are many factors involved in figuring out how much each lender gets, including:

  • whether the loan was secured or unsecured;
  • how much money the bankrupt person owes in total; and
  • how many lenders there are.

The loan likely cannot be paid back before the declaration of bankruptcy

Because the lender might not get the money back, some people try to repay specific lenders before starting the bankruptcy process. For example: a borrower may want to pay back his or her loved one before declaring bankruptcy, so that the loved one gets all their money. This is not allowed.

Generally, people are not allowed to pay off loans just before filing for bankruptcy. This is because it would be unfair to the other lenders. If you do try to repay some loans just before filing for bankruptcy, the Court can order that the payment be given back, so that the money can be shared among all the other lenders.

Be Aware

There are some exceptions to this general rule. Each situation has to be assessed on a case-by-case basis. If this is your situation, consider talking to a lawyer about the best way to proceed. For more information, see the Working with a Lawyer and Community Legal Resources & Legal Aid Information Pages.

The lender probably won’t get all of their money back

Once the bankruptcy process begins, all lenders have to wait and see how much of their money will be paid back to them. Usually, it is not the full amount.

If you find yourself in this situation, it may be useful to seek advice from a lawyer. For more information, see the Working with a Lawyer and Community Legal Resources & Legal Aid Information Pages.

More information

For general information about the bankruptcy process, see the following resources.

Web Bankruptcy FAQs
Centre for Public Legal Education Alberta
English

Web Bankruptcy
Government of Canada
English


Web You Owe Money — Considering Bankruptcy
Government of Canada
English

Web How Bankruptcy Works
Bankruptcy Canada
English

For more information about bankruptcy and insolvency, see the following resources.

Web Bankruptcy FAQs
Centre for Public Legal Education Alberta
English

Web Can personal loans from friends be included in a personal bankruptcy?
Welker & Associates Inc.
English
This is a private source. Learn more here.


Web Bankruptcy Alberta — implications
Raymond Chabot Grant Thornton
English
This is a private source. Learn more here.

Web Frequently Asked Questions About Bankruptcy
BDO Canada LLP
English
This is a private source. Learn more here.

Web FAQ about Bankruptcy
Allan Marshall & Associates Inc.
English
This is a private source. Learn more here.

Web Frequently Asked Questions About Declaring Bankruptcy
Exelby & Partners Ltd.
English
This is a private source. Learn more here.

Web 8 myths of bankruptcy
CBC
English

French resources:

Web Faillite
Government of Canada
French


Process

See the sections below for forms and templates you can use to:

  • transfer property into joint names;
  • put property into tenancy in common; and
  • make a promissory note.

Please read “Who is this Information Page for?” just below to make sure you are on the right page.

LegalAve provides general legal information, not legal advice. Learn more here.

Last Reviewed: November 2016
Who is this Information Page for?

There are many ways family members can get involved with each other’s finances. The Law tab of this Information Page describes these options in detail.

You are currently on the Process tab of this Information Page, which has information about the process you need to follow to:

  • put property in joint names; and
  • make a promissory note.

There is also important information in the Common Questions and Myths tabs above.

In general, the law and process on this Information Page is for people who live in Alberta. This is because for Alberta law to apply, the people affected should live in Alberta and the property being dealt with should be in Alberta. If you need to deal with property that is in another province, territory, or country, please see the Ongoing Family Relationships & Out-of-Province Issues Information Page.

Transferring property into joint names

There are 3 ways that a joint tenancy can be created.

  1. You can purchase property together with one or more people as joint tenants.
  2. A person can transfer or give property to you and one or more other people as joint tenants.
  3. You can transfer your own property to yourself and one or more other people to create a joint tenancy.

There are generally 4 requirements must be met for a joint tenancy to be created. They include the following.

  • All of the owners have equal access to the property, and equal ownership of the property.
  • No person can own more of the property than the others.
  • The owners start owning the property at the same time.
  • There is a legal document that shows the owners of the property.
Remember

Alberta’s Law of Property Act says that when property is placed into 2 or more names, the default is that that property will be held as tenants in common. This is true unless it is clear that the parties intended to create a joint tenancy.

As a result, the language used in the document creating the joint tenancy is crucial. It must be very clear that the people involved intend to create a joint tenancy. If the language does not make that clear enough, the courts can presume that a tenancy in common was intended instead. This means that sometimes, the courts may declare that people own an asset or property as tenants in common, even if a joint tenancy was intended. Usually, the words “joint tenancy” must be used in the legal document that shows co-ownership.

Remember

Placing property in joint tenancy has serious consequences both during the life of the joint tenant and if one of the tenants dies. Before transferring your property into joint names, consider getting legal advice. See the Working with a Lawyer Information Page.

Transferring money into joint names

To transfer money held at a bank or other financial institution into joint names, you must contact that bank or financial institution. Each one has its own specific forms.

Remember

The words “joint tenancy” must be used in the legal document that shows co-ownership.

Transferring land

To transfer land into joint names, you must use an Application for Transfer of Land. See the following resource.

PDF Application for Transfer of Land
Government of Alberta
English

For information and instructions about what to do with this application, contact the Land Titles Office and see the following resources.

Web Land Titles Office Locations
Government of Alberta
English


Remember

The words “joint tenancy” must be used in the legal document that shows co-ownership.

Transferring other property into joint names

For other kinds of property, it will depend whether there is an ownership document where a transfer into joint tenancy can be recorded. For example: cars have an ownership paper that is often called the “pink slip.”

If there is no type of ownership paper, you will want to consider creating a joint property agreement to ensure that all the legal requirements are met.

Joint property agreements

The law has strict requirements about what needs to happen to create a joint tenancy. As a result, you may wish to enter into a joint tenancy agreement. A lawyer can help you draft the agreement and help you resolve matters if you have any disputes with other joint tenants. They can also help make sure that the joint tenancy is created properly.

For more information about finding a lawyer and working with a lawyer, see the Working with a Lawyer Information Page.

Putting property into tenancy in common

Putting property into tenancy in common is somewhat easier than putting property into joint tenancy. Remember, Alberta’s Law of Property Act says that when property is placed into 2 or more names, the default is that that property will be held as tenants in common. This is true unless it is clear that the parties intended to create a joint tenancy.

Nevertheless, you will want to ensure that any ownership document clearly shows that the property is intended to be held in a tenancy in common (including all the names of the tenants).

Also, given that each tenant can easily deal with their share as they see fit, the tenants will want to consider entering into a formal written agreement that outlines each tenant’s obligations. For example, you may want to agree that a tenant who wants to sell their share must first offer it to the other tenants. A lawyer can help you create such an agreement. For more information about finding a lawyer and working with a lawyer, see the Working with a Lawyer Information Page.

Making a promissory note

A promissory note is a written and signed promise to pay a certain amount of money to another person.

It usually includes information such as:

  • What are the legal names of the borrower and lender?
  • Is the loan secured or unsecured?
  • What is the amount of the loan?
  • What is the interest rate?
  • How much is each payment, and how often must payments be made?
  • By what date does the loan have to be paid off?
  • What are the consequences if the borrower cannot pay back the loan?

Before attempting to create a promissory note, you will want to learn about the basics of contract law. For more information, see the “Before you start: Contract law basics” section of the Coming to an Agreement on Your Own Information Page.

Before signing the promissory note, you will each want to consider getting independent legal advice. The lawyer can also help ensure that you have created a valid promissory note. See the Working with a Lawyer Information Page.

For more information and templates to help you create promissory notes, see the following resources.

Web How to Write a Promissory Note
wikiHow
English
This resource is from a private source outside Alberta. Learn more here.

Web Sample promissory note for loans to family, friends
Yahoo!
English
This resource is from a private source outside Alberta. Learn more here.

PDF Promissory Note
Washington State Bar Association
English
This resource is from outside Alberta. Learn more here.

Web Free Promissory Note
Suze Orman
English
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Provincial Court

Queen's Bench

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