This content was originally posted in our real estate agents Newsletter. If you are interested in receiving relevant information for real estate agents as soon as it drops, you can sign up here. 
 

As a real estate investor or agent, you may get questions about title of a property and how that affects a mortgage, insurance and everything else that comes with property ownership. 

As with any decision in life, real estate is similar in that there are pros and cons to having multiple partners on title. You may find yourself, or one of your clients, in a situation where you need to remove someone from title or have someone added. We hope to dive into the basics with you here, but please know that if you have any questions, we are always happy to help!

How do you remove someone from the title of a property?

There are a few common reasons why you want to have someone removed from the title of your property; a divorce, a change of personal financial circumstances, or a death.

You can remove someone from title in one of two ways.

1. The most common way is to prepare and register a transfer. When a property is held in joint tenancy and if one of the joint tenants should pass away, a survivorship application is registered to remove the deceased name from the title.

2. In other circumstances, a quitclaim is used to remove someone from title whereas a grantor disclaims all interest in a property and passes their interest to a grantee.

With a quitclaim there is no transfer of money or warranties, so there will not be a guarantee that the current title has any liens or issues at hand for the grantee. A quitclaim is used with trusted individuals such as within family.

How do you add someone to title?

You can add a party to the title of your property by filing a land transfer tax form with the Land Titles Office. It’s quite simple but there can be major implications.

The price of adding someone to a title will depend upon your situation but will cost approximately $750.00.

What are the pros of adding someone to title?

Joint title with a member of your family can be a simplistic way to transfer ownership of your property directly after you pass away without the property having to go through probate.

You can avoid some Estate Administration Tax (EAT) by adding a party to the title of your property, but when your child is listed as a joint tenant there are risks involved.

In the case of adding a child to the title of your property, likely, the home will not be their primary residence. There will be potential income tax complications, like capital gains, from doing this. In Ontario, your child will forfeit their first-time buyer’s exemption for the property transfer tax on the home purchase.

What are the implications of adding someone to title?

• Tax implications such as capital gains.
• Your property will be opened to the additional person’s creditors and liabilities.
• All owners must agree to sell the property.
• Potential financial problems with the additional party.
• Potential conflicts with the additional party.
• If you ever wanted to re-finance or sell the property you would need the permission of the additional party.
• Land Transfer Tax is payable on any monies changing hands for the transfer (i.e. you are selling an interest in the property) or where there is a mortgage registered.

Final thoughts

It is important to note that a property title and a mortgage are two different things.

Changing the title of a property does not change the mortgage and those responsible for paying the mortgage except that any new owners are now responsible for the mortgage as long as they are on title.

If you have questions, we have answers.

If you have any questions about real estate titles, please connect with us.

McMurter & Associates has been providing real estate legal services for over 30 years in the Durham Region. We strive to provide you with straightforward and useful advice that you can use in your business. If you have found this useful, please share this information with your colleagues, or better yet, invite them to sign up for the newsletter!

If you have questions about your real estate transaction, we are available Monday to Friday, 9am until 5pm.  Email: info@mcmurter Phone: 905-666-9200