Property Transfers and Gifts in Ontario

A property transfer changes the registered ownership of real estate. It may involve adding or removing an owner, transferring an interest to a spouse or family member, gifting property, or changing how multiple owners hold title.

A property transfer can have legal, mortgage, land transfer tax, income tax, family-law, and estate-planning consequences. These matters should be considered before the transfer documents are signed or registered.

Nobari Law Professional Corporation assists clients with property transfers in Ontario.

A property transfer may involve:

• adding or removing an owner;
• transferring property between spouses or family members;
• gifting all or part of a property;
• changing how co-owners hold title or their ownership interests;
• completing a transfer following a separation or court order; or
• transferring an ownership interest without an ordinary sale.

Adding a person to title gives that person a legal ownership interest in the property. Removing an owner transfers that person’s registered interest to the remaining owner or another recipient.

Before proceeding, the parties should consider:

• the purpose and terms of the transfer;
• how ownership will be registered afterward;
• whether money, mortgage debt, or another benefit is involved;
• whether lender approval or refinancing is required;
• possible land transfer tax and income-tax consequences;
• matrimonial-home and family-law considerations; and
• the effect on the parties’ estate plans.

A title transfer does not, by itself, release a person from obligations under an existing mortgage or credit agreement. Any required change to the mortgage must be addressed with the lender.

Where more than one person will own the property, the parties must determine how ownership will be registered.

Joint tenants generally hold the property together with a right of survivorship. When one joint tenant dies, that person’s registered interest generally passes to the surviving joint tenant or joint tenants rather than through the deceased owner’s estate.

Tenants in common each hold an ownership interest that does not include a right of survivorship. An owner’s interest may pass through their estate when they die.

The appropriate form of ownership depends on the parties’ intentions and circumstances. Ownership decisions may affect estate planning, creditor exposure, family-law rights, and tax matters.

A property transfer is not automatically exempt from land transfer tax merely because it is between family members or no cash is paid.

Land transfer tax may be based on money paid, mortgage debt assumed, liabilities undertaken, or another benefit provided as part of the transfer. For example, where a person receives an ownership interest in property that is subject to a mortgage, part of the mortgage debt may be treated as consideration. 

A direct transfer of property between spouses may qualify for an exemption from Ontario land transfer tax. The details of the transfer should still be reviewed to confirm whether the exemption applies.
 

A transfer involving property located in Toronto may also be subject to Toronto’s Municipal Land Transfer Tax. 

The applicable land transfer tax treatment must be determined from the details of the proposed transfer.

A person may wish to gift all or part of a property to a child, parent, spouse, or another individual.

For Ontario land transfer tax purposes, a genuine gift may result in no tax where there is no consideration of any kind. However, mortgage debt assumed by the recipient or another benefit provided as part of the arrangement may result in land transfer tax. A family relationship alone does not make the transfer tax-free.

A gift may also have income-tax and estate-planning consequences. The parties should obtain accounting or tax advice before completing the transfer.

Transferring property for little or no payment does not necessarily mean that there are no income-tax consequences.

Depending on the property and the relationship between the parties, the transferor may be treated for income-tax purposes as having disposed of the property at fair market value. Special rules may apply to transfers between spouses or common-law partners. 

Nobari Law does not provide accounting or tax advice. Clients should obtain advice from an accountant or qualified tax professional before proceeding where tax consequences may arise.

Where a mortgage or secured line of credit is registered against the property, the proposed ownership change may be affected by the terms of the existing financing.

Clients are responsible for contacting their lender or mortgage professional and addressing any requirements relating to notice, consent, refinancing, or changes to the borrowers.

Adding or removing someone from title changes the registered ownership of the property but does not, by itself, add that person to or release another person from an existing mortgage or credit agreement.

A property may be transferred between spouses for estate planning, refinancing, separation, family arrangements, or other reasons.

The transfer may require consideration of:

• the existing mortgage; 
• land transfer tax and any available exemption; 
• the nature of the property; 
• whether the property is a matrimonial home; 
• a separation agreement or court order; 
• income-tax consequences; and 
• whether separate legal representation is required. 

Ontario’s Family Law Act provides special protections relating to matrimonial homes, including restrictions on disposing of or encumbering an interest without the other spouse’s consent, subject to statutory exceptions. 

The person transferring the property and the person receiving the property may have different legal interests.

Separate legal representation or independent legal advice may be required depending on:

• the relationship between the parties; 
• whether one person is giving up an ownership interest; 
• whether consideration is being paid; 
• whether a mortgage is involved; 
• the possibility of a conflict of interest; and 
• applicable professional-responsibility requirements. 

The Law Society of Ontario generally restricts one lawyer from representing both the transferor and transferee, subject to limited exceptions, including certain transfers between related persons. 

Nobari Law will confirm whom the firm can represent after reviewing the proposed transfer and completing a conflict check.

Clients may be asked to provide:

• valid, current identification and any additional documents required for identity verification; 
• the municipal address of the property; 
• the names of all current registered owners; 
• a recent property-tax bill; 
• mortgage and secured line-of-credit information; 
• the reason for the transfer; 
• the relationship between the parties; 
• details of any money, mortgage debt, or other consideration involved; 
• the ownership interest being transferred; 
• the intended form of ownership after the transfer; 
• marital-status information; 
• lender or mortgage-broker contact information; 
• any separation agreement, court order, or other relevant agreement; and 
• information concerning any known judgments, liens, or title concerns. 

Additional information may be required depending on the property and the proposed ownership change.

Do not send original documents, identification, complete account numbers, passwords, or other sensitive information unless requested by Nobari Law Professional Corporation. If requested, please use the document-sending method confirmed by the firm.

Depending on the transaction and scope of the retainer, Nobari Law may assist with:

• reviewing the proposed ownership change; 
• explaining the legal effect of the transfer; 
• reviewing registered ownership and interests affecting the property as required; 
• discussing how the recipients will hold title; 
• identifying applicable land transfer tax requirements; 
• communicating with the lender or mortgage professional where required; 
• preparing the transfer and related legal documents; 
• obtaining the required signatures; 
• registering the ownership change; 
• completing applicable land transfer tax statements; and 
• reporting to the client after registration. 

The legal services provided will depend on the parties, property, mortgage arrangements, transfer structure, and surrounding circumstances. Accounting, tax, appraisal, financial-planning, and family-law advice should be obtained from the appropriate qualified professionals where required.

A property transfer should be carefully structured before ownership is changed. The appropriate process will depend on the current title, intended ownership, mortgage arrangements, consideration, tax treatment, and relationship between the parties.

Contact Nobari Law Professional Corporation to discuss adding or removing an owner or completing another property transfer in Ontario.