How to Transfer Property Title to a Family Member in Ontario The Process and Its Implications

If you are considering transferring property title to a family member in Ontario, you should be aware of certain considerations and legal steps after which it becomes a fairly straightforward process. Your goal may be to gift a property, add a family member to an existing title, or to sell a property at a reduced rate and you can do this properly after you understand all the steps.  

This blog should give you a fair understanding of the steps and implications of transferring property title to a family member. Don't forget to reach out to the legal experts at Houseclosing to have your interests protected. 

Basics of Title

Title to property is shown on a Transfer document which is available at the land registry of Ontario. The Transfer proves ownership of property. When a person decides to transfer the title of their property, they have to change who legally owns that property. In Ontario, this implies that you will have to complete specific forms and there may be fees and taxes considerations involved. Transfers of property and change in legal title are done through lawyers in Ontario.

Why Transfer Property to a Family Member?

Different people have different reasons and goals when they want to transfer a property title to a family member in Ontario:

• For the purpose of gifting: Parents may want to transfer their home as a gift to their children.
• Joint ownership: A person may want to add a child or a spouse to the title to share ownership.
• Estate planning: People want to plan for the future so that the assets are transitioned smoothly without any conflicts.
• Financial assistance: Some people also want to sell a property to a family member at a reduced price for financial support.

Understanding the Implications

You need to understand both the legal and tax implications when you transfer a property title to a family member.

Legal implications: When you add a family member to the title, they will become a co-owner. If one adds a family member as a joint tenant, then the right of survivorship will apply. Errors in the transfer or misunderstanding about the type of ownership can lead to complications. This is easily avoided by consulting a real estate lawyer.

Tax implications: One may be looking at a land transfer tax, and in some cases, capital gains tax if the property has increased in value. Please take time and advice to understand these and other costs beforehand to avoid any shocks. You need a lawyer to have clarity.

Also Read: - Agreement of Purchase and Sale Ontario

Steps to Transfer Property Title

1. Gather the Necessary Documents

   The first step in transferring title of property to a family member involves collecting the necessary documents. These documents may include:

   • Current property title
   • Identification for all involved
   • Any existing mortgage documents (if applicable)
   • A recent property survey or assessment
   • A recent tax bill

   If you have these documents ready before starting the process, the process will be much faster as these will be required by your lawyer.

2. Decide on the Type of Transfer

   You should have a clear idea about the goal and nature of the transfer. The usual reasons or options are:

   • Gifting: here the property transfer does not include any payment.
   • Selling: you may want a specific price for the property. Sometimes the selling price may even be below the market value.
   • Adding a co-owner: adding another person to the title while you also retain ownership.

   Based on the type of transfer, specific documents may be needed and the process may vary a bit:

3. Take legal consultation

   Wisdom lies in getting consultation from a real estate lawyer. This is important because a lawyer can assist you in reaching your goals by understanding the requirements and the tax consequences of the transfer like land transfer tax.

    

   Another extremely important thing that your lawyer will do is to perform a title search. This will confirm the current ownership and also identify any claims or restrictions such as mortgages or liens on the property.

4. What does your lawyer do?

   The process requires lawyers to complete the necessary searches, confirm ownership and draft the ‘Transfer/Deed of Land’. This is the document which will change the ownership from the current owner to the new owner. In addition to this the lawyer may also draft a ‘Statement of Adjustments’. This document outlines any financial adjustments related to taxes or utilities. Finally your lawyer will register the Transfer/ Deed of Land in the appropriate Land Registry Office, typically electronically.

5. Pay Taxes and Fees

   It is quite logical that a property transfer would include certain costs which you have to bear:

   • Land Transfer Tax: is generally applied to most property title transfers in Ontario. You need to check the details and consult legal experts as certain exemptions may be there like in the case of property transfer between family members.
   • Legal Fees: a lawyer will charge a fee for the services and these can vary based on each case.
6. Update Ownership Records

   You must verify that the ownership records are updated after the registration is complete. It would be wise to get a copy of the new title for your records.

Also Read: - COMMON-LAW SPOUSE ENTITLED TO IN ONTARIO

Common Scenarios

Adding a Family Member to the Title: adding a family member to the property title in Ontario is considerably simple. This is a good way to establish joint ownership which makes it easy for future decision-making. Speak to a lawyer regarding the pros and cons to ensure which solution fits your specific needs.

Selling Property to a Family Member: if you are selling a property to a family member, it is always important to have a clear agreement. To avoid any misunderstandings and conflicts, ensure that the sales agreement defines all conditions and purchase price.

Common Mistakes to Avoid

• Some costs are better paid and this is why you should remember that it is crucial to consult a real estate lawyer.
• Do not ignore tax implications as this can be a major and unexpected cost.
• Failure to verify that the records are updated and reflect the new ownership can be a big mistake . All the updated records should reflect the new ownership to prevent legal issues in the future.

Also Read: - Notice Requirements to end the Tenancy

Conclusion

Working with the legal experts at Houseclosing will make this an easy process for you. Our team can ensure a successful and smooth property transfer. Get in touch with us for personalized assistance where we will guide you through every step.