Wednesday, 5 August 2015

Registering Property Ownership/Titles - What's In a Name?

Have you given much thought to how your property title is registered? Carefully choosing the right type of registration for you could save you thousands in fees, headaches, and legal battles later on. Discuss your options now and save yourself time, hassle, and money!

Types Of Title Registration

In BC(and many other places), there are two ways to register your property title. They both have pros and cons which should be discussed at length with your lawyer so you understand the risks and benefits of each before making your final decision.

Carefully consider who you share your moon-property with, and how it's registered!

Joint Tenancy

In joint tenancy, all owners maintain an undivided interest in the land being registered. Between themselves, they share separate rights. As against everyone else, they are treated as a single owner.

A defining feature of joint tenancy is the Right of Survivorship. This dictates that should one owner pass away, the property automatically goes to the remaining living owner(s).

Tenancy in Common

Tenancy in common is a slightly more flexible form of ownership, under which the interests of the owners can be divided and may even be divided in unequal shares. In it's most basic form, it may also allow owners to sell or mortgage their share without the consent of the others. While this is not always the case, it could create some potential problems.

Upon the death of an owner, a tenancy in common will leave a deceased owner's share to his/her estate. This share will then be subject to probate and any applicable taxes before it then passes to the beneficiaries.

For parents who are considering whether to register property as joint or tenancy in common with an adult child, there are some important points to consider:

Joint Tenancy
  • You may be unable to sell or mortgage the property without the consent of all parties on title. 
  • Upon the death of one owner, there may be tax/capital gains implications for the remaining owner.
  • The property may be at risk of exposure to the child's(or potentially the child's spouse's) creditors.
  • For more info read: Joint Tenancy as an Estate Planning Tool
Tenants in Common
  • Can be more difficult to distribute if multiple beneficiaries are not in complete agreement amongst themselves.
  • Will be subject to probate fees and/or taxes
  • Will trigger capital gains if sold by beneficiaries
  • See RBC's Estate Planning Guide for more general information.

Tenancy in Common and Property Title Transfer Tax

In the case of a parent acting as a co-borrower with their child during a first-time home purchase, registering the property as a tenancy in common may allow you to take advantage of the property title transfer tax exemption for first-time buyers. See my article HERE for more info on this exemption.

Tenancy in common allows the property to be registered as 99% ownership by the child and 1% ownership by the parent. By creating this situation, the child retains 99% of the benefit of the transfer tax exemption. This option should always be discussed with your lawyer, but could be a great way to save some money on a first-time home buyer's purchase!

Because there are many possible complications of these scenarios and with laws constantly changing and being updated, always seek independent legal advice before making a decision regarding your property title registration. This guide is only meant as general advice and should not be solely relied upon. If you are interested in learning more, please Contact Me and I would be happy to get you in touch with the legal advice you need.

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