14 Mar Adding a Name to House Title in Ontario
How to Add a Name to a House Title in Ontario
If you’re considering adding a name to your house title, it’s important to understand the potential legal and tax ramifications before doing so. Read more to learn our top FAQ’s when editing a property title in Ontario.
What is a Title Transfer?
A ‘Title’ is a legal term referring to the registered owner of a property. Transfer of title happens when a person is added or removed from the property ownership or title by the owner of the property. This may include the full transfer of ownership, e.g. when you sell the property to a new owner, or it may include adding a spouse or family member to the house title.
Types of Property Ownership
Under Ontario law, a title can be held by one person, or by two or more people as “joint tenants” or “tenants in common”. If the owners are registered as joint tenants, it means that if one of them dies, the property belongs to the surviving joint tenant. This is called the right of survivorship.
If the property is held by tenants in common, however, if one of the owners dies, ownership will pass to whoever is the beneficiary of the person’s estate because it does not automatically belong to the other tenant in common.
What Percentage Does Each Owner Have?
In the case of joint tenancies, each tenant is assumed to own the same percentage of interest in the property. With tenants in common, the property can be owned in whatever percentage shares the owners decide. For example, one person may have a 75 percent interest and another may have 25 percent — this is common when one individual is putting up most or all of the money for the purchase.
When is Title Transfer Required?
A title transfer is required in any situation where ownership of a property is transferred to another person, including purchasing a home or adding a name to the house title — such as adding your spouse to house title or adding a child or other family member.
A title transfer may also be required if a change in personal circumstances forces a change in ownership, for example, in the event of a separation — personal or professional — between the owners.
Should I Add my Spouse to the House Title?
There are some good reasons for adding a spouse to a house title in Ontario. For example, if you get married and your spouse is moving into the home you already own. As opposed to selling your property and buying a new place together, you can decide to add your spouse to the title so their rights to ownership of the matrimonial home are protected under the law.
However, it’s important to remember that adding a name to your title can have real legal, tax and other consequences — such as business or tax planning consequences, or estate planning complications. To avoid any unpleasant surprises that adding your spouse to the title could cause, speak to a real estate lawyer. You may discover a better way to reach your goals without putting yourself at risk.
Risks of Adding a Name to House Title in Ontario
When you add someone to your property title, you are giving that person a legal right to your property — you can’t just take it back if you change your mind. The more people registered on the title, the more risk you’re taking on.
For example, let’s say you decide to add your child to their property title in order to avoid probate fees. This seems like a great idea — until that child gets entangled in a messy divorce or goes bankrupt. Then you’re looking at dealing with your child’s ex-spouse or a creditor who wants to sell your home to claim your child’s share. “Gifting” your home to your kids also makes them co-owners of the property who must consent to any sale, mortgage, or even mortgage renewal.
Title transfer may also trigger tax consequences. For example, let’s say you add your children to the title of your principal residence. If you lived in the home for the entire time you owned it, you should be exempt from paying capital gains tax. But, if your children do not live in the house with you, you may find yourself slapped with a considerable tax bill when you or your children sell the house.
Before you make any changes to the title of your home, consult an experienced real estate lawyer to discuss the risks of adding someone to the house title.
Common Law Spouses and Property Rights
There has been a shift towards common-law living in recent years; nearly 25 percent of all couples living together in Canada are unmarried. Many Canadians are leaving property rights out of their Will because they assume their common-law spouse has the automatic right of survivorship. This is a myth.
In Ontario, the Family Law Act recognizes that married spouses share the value of any property acquired during the marriage, and married spouses also have a right to live in the matrimonial home, regardless of whose name is on the title. These rules do not apply to unmarried couples — cohabiting does not automatically entitle one person to a share of the other’s property.
To ensure you’re not leaving your common-law spouse (or being left) out in the cold, you can craft a cohabitation agreement. Cohabitation agreements specify the rights and obligations each spouse will have as a result of their relationship, and usually include provisions for the division of property. However, in some scenarios, cohabitation agreements may not give your common-law spouse the same entitlements as joint tenancy.
Stewart Esten Real Estate Experts
There are many factors to consider, and no one-size-fits-all solution, which is why speaking to an experienced real estate lawyer is essential to make sure you’re getting what you want, and without any unpleasant surprises. Contact the real estate law experts at Stewart Esten today.