The Best Way to Transfer Real Estate Property to Family
Buying and selling real estate has always been tedious; however, transferring property has added risks. When transferring property to your family, if you don’t follow the rules to the T, even the slightest error can tie your loved ones with many potential risks.
What is a Title and Title Transfer?
A title refers to the ownership of a property and the legal rights that come with it. Your set of legal privileges can vary depending on your contract or deed. Some of your rights may include:
- The right of possession
- The right of control
- The right of exclusion
- The right of disposition
If you ever choose to make changes to the deed or transfer the ownership of your property, you will need to undergo a process to transfer the title. In most regions, including Ontario, you need an experienced real estate lawyer present to complete a title transfer.
Ownership Structures for Transfers
If you want to co-own a property with your spouse or a family member, you need to figure out how each of you will hold the title. Your lawyer will ask you to decide whether you want to own it as joint tenants or tenants in common.
As joint tenants, each party equally co-owns the title. Family members or married couples commonly enter joint tenancies. If you choose to break from this ownership structure or one of you decides to sell or transfer their interest to another person, then the title is converted to a tenancy in common. If one of the members in a joint tenancy dies, their interest is automatically and equally transferred to the surviving owners – through the right of survivorship.
Tenancy in common comes into effect when all parties do not have uniform ownership interests. The ownership is no longer 50-50 or divided equally. New parties can enter a tenancy in common at any stage of the ownership.
Three ways in which a tenancy in common can break:
- One or more of the co-owners decides to transfer or sell their interest in the property
- One or more of the co-owners buys the stake of the remaining owner(s)
- Everyone agrees to sell the property
As opposed to a joint tenancy, tenants in common have no rights to survivorship. The deceased tenant’s interest will pass to their heir, next of kin, or agent mentioned in their will.
Transfer Your Home by Gift
Under the Land Registration Reform Act, a quitclaim deed is the best way to transfer your real estate property to your spouse or children. A quitclaim deed allows you to ‘quit’ or give up all rights or claims to the property. It is a risky method because it offers minimal buyer protection. However, transferring your home by gift, the risk factor of the quitclaim is minimized because there’s less chance of any fraudulent issues amongst the family.
As Canada does not put a tax on gifts, you can save your spouse or children from paying unnecessary taxes by transferring your home as a gift (i.e. a true gift where no consideration is provided, including in the form of a payment or assumption of an obligation, like a debt).
Hire an Experienced Real Estate Lawyer for Your Property
Creating, upholding, and updating legal documents is a big task. Every minor detail can make a huge difference if not handled professionally by an experienced real estate lawyer.
Contact the Levy Zavet team today and let us know how we can help you transfer real estate property to your family.
