What Are Some Risks Of Adding Someone To Your Property Title?

Title is a legal term that refers to the rights to a piece of land that are owned by a person or a corporation.  In Ontario, you must register your title in the provincial land registry.  Other documents that must be registered include deeds (which transfer ownership from one person to another) and mortgage documents.

When you add someone to your property title, you are giving that person an interest in your property. There may be some good reasons to do this.  For example, if you get married and your spouse is moving into a home that you already own, you may decide to add them to your property title.

Title to property that is in the name of more than one person can be owned in two different ways:

  • joint tenants have a right of survivorship, which means that title of the property is transferred automatically to the surviving tenant when one tenant dies
  • tenants in common do not have a right of survivorship.

Some people decide to add their children to their property title for estate reasons, such as the desire to avoid probate fees, and this can be risky.  Before you make any changes to the title of your home, consult our real estate or wills and estates lawyers to discuss what are some risks of adding someone to your property title. You may discover that there is a better way to meet your particular goals.

The most common risks of adding someone to your property title include:

  1. You can't take it back if you change your mind. Wills can be changed.  Once you gift someone with an interest in your property, you have given them a legal right to your property, which is something that cannot be changed as easily as re-writing a will.
  2. You open up your family to significant tax liability. When you sell a house that was your principal residence for the entire time you owned it, you are exempt from paying capital gains on any increase in value to the house while you owned it. If you add your children to the title and they do not live in the house with you, then you open yourself up to a potentially large tax bill when you (or your children) eventually sell the house.
  3. It may not be an effective way to accomplish your goals. In 2007, the Supreme Court of Canada decision in Pecore v. Pecore changed the way the courts apply the right of survivorship when a parent adds a child to a property title. The assumption now is that a child who is added to a property title (in the absence of having paid for it) is holding the property in trust for the parent. A child who believes their parent intended to gift them with the property at the time of transfer, or intended to gift them with the right of survivorship, needs to be able to prove their position. It is vital that any addition of a person to title is documented properly to ensure that it will help accomplish what you want.
  4. You risk losing your home. The more people who are registered on title, the more your home is at risk to potential creditors and lawsuits. Adding a child to the title to your property may seem like a good idea until that child is going through a divorce or goes bankrupt and you are dealing with an ex-spouse or a creditor who wants to sell your home and claim your child's share.

While there are valid reasons to add someone to your property title, it will depend on the context and there may be more effective and less risky ways to accomplish your goals. Our Richmond Hill wills and estate lawyers can help you to find the best way to protect your family. Contact us today. Please note the content in this article is intended to act as a general overview on a legal topic and does not constitute as legal advice.