Area of Law: Real Estate Law
Answer Number: 399
Title and ownership of propertyRegion: Ontario Answer Number: 399
What is title?
Title is a legal term meaning registered owner of real property. When your lawyer is preparing to transfer the title to your property, you will likely be asked who will actually own it. You may choose to list one name alone, fellow investors (a parent, for example) or, particularly in a marriage, both spouses. The issue of whose name is on the title is frequently important when one individual is putting up most or all the money for the purchase. Title can also be held by other than individuals, such as partnerships and corporations.
How many people can be on title?
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. Only the last surviving joint tenant can leave the property to someone in his or her Will. If the property is held by tenants in common, however, if one of the owners dies, the property will belong to whoever is the beneficiary of the person’s estate. In other words, a tenant in common can leave their share of the property to whomever they wish in their Will 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 joint tenant is deemed to own the same percentage of interest in the property. For example, if there are two joint tenants, each owns 50%, if there are four joint tenants, each owns 25%. This is not the case with tenants in common. With tenants in common the property can be owned in whatever percentage shares the owners decide. For example, one person may have a 75% interest and another may have the remaining 25%.
Ownership of matrimonial home
Most lawyers will recommend that married or common-law couples own their home equally as joint tenants. This will make them each full owners, and the survivor will become the sole owner if the other dies first. This arrangement prevents the property being tied up in probate proceedings and may result in significant tax savings. (Be aware, however, that there are still administrative and legal costs associated with transferring title to a surviving joint tenant.)
It is also important to know that matrimonial property laws can override your decisions on who holds title. In Ontario, the matrimonial home is a special asset and its value will be split by the spouses even though only one name is on the title.
Adding a child or other third party (such as a relative or business) as a joint tenant can be risky. The danger here is that your property could become entangled in that person’s financial or marital problems. That said, a lawyer may be able to help structure an agreement to avoid such difficulties.
For business or tax planning reasons, you may want your property owned by one spouse alone. Your lawyer should also discuss the estate planning consequences with you. When property titles are held in joint tenancy, it can make drafting your Will more complex. For example, if you want to pass your property on to a child or someone else, the Wills of both joint tenants must address this wish.
If your property is already in one individual’s name and you are considering transferring it to a joint tenancy, seek the advice of your lawyer. The provincial government may levy a fee based on the value of the property. HST may also be owed if the added name on the title is not a spouse.
Ownership of other properties
If more than one individual is purchasing a property, and they do not want to leave their share to the other owner in the case of their death, it is best that they own the property as tenants in common. This is often the case when people are purchasing a property as an investment, and where the individuals are not related to each other. In these situations, it is also important that the amount each individual is paying and the percentage ownership that each will have is carefully considered before the purchase is made, thereby avoiding last-minute closing issues.
Ownership of property is an important issue and can be quite complicated. For further information and assistance, consult a real estate lawyer.
If you are buying a home and want to know how much of a mortgage you qualify for, use the Scotiabank mortgage calculator .
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