What You Need To Know About Transferring Land Ownership

Laws related to land ownership and title transfers are complex. As a result, buying and selling property without a real estate lawyer can become confusing. That’s why it is important to understand land ownership rights and processes before a title transfer to avoid risks associated with an improper sale, like undisclosed property issues and scams. Here is a guide to help you understand land ownership transfers, including their meaning, ways and costs.

Before we explain the essential points about land ownership transfer, you should first learn the meaning of land title and transfer.

Meaning of Land Title

A land title, also known as a certificate of title, is a formal document outlining the rights a person holds in a piece of property. This vital document not only confirms ownership of a property but also help prospective buyers understand more about existing liens, easements, and other rights.

Meaning of Land Transfer

A land transfer is a process by which a seller transfers the property ownership title to a buyer. A transfer of title is done at the end of a purchase agreement to ensure the property is now officially owned by the buyer. A title transfer can be partial or full for several reasons, such as family issues (like separation or divorce) or the property is being transferred to another family member.

When Is Land Ownership Transfer Needed and How Is It Done?

1)      Death of the Owner

The most common scenario where a land title is transferred is the owner’s death. There are two ways to transfer ownership: surviving joint tenant and transfer to an executor or personal representative. Surviving joint tenant is when the owner appears as a joint tenant on the property and the surviving owner automatically receives full ownership. In this case, there is no land transfer tax. Only a simple registration is needed. On the other hand, transfer to an executor is when the previous owner transfers the title to an executor in their will. The executor is responsible for disposition of the property or settlement of the assets of the deceased person. This procedure is also known as the probate process.

2)      Transfers Between Immediate Family

In many cases, owners wish to transfer their property to their children or parents. There are two common ways to do it:gifts inter vivos and donatio mortis causa.

·         Gifts inter vivos is when the donor transfers land or property to their family member as a gift and the donee agrees to accept the gift. The donor's intent in transferring title to the donee must be immediate, unequivocal and irrevocable.

·         Donatio mortis causa is the type of land transfer that takes place after the owner’s death. It is a faster method of transferring property than through a will and is likely to be taken over by a probate court.

What Is the Cost of Land Ownership Transfer?

Transferring land ownership is not as easy and inexpensive as it might seem. There are certain taxes to be paid, including the land transfer tax. This is a marginal tax and each portion of a property’s value is taxed at a unique rate. Currently, the land transfer tax rates in Ontario are as follows:

·         0.5% for a purchase price up to and including $55,000

·         1% for a purchase price exceeding $55,000, up to and including $250,000

·         1.5% for a purchase price exceeding $250,000, up to and including $368,333 (full tax rebate for first-time homebuyers)

·         1.5% for a purchase price exceeding $368,334, up to and including $400,000 ($4,000 tax rebate for first-time homebuyers)

·         2% for a purchase price exceeding $400,000, up to and including $2,000,000

·         2.5% for a purchase price exceeding $2,000,000 

Transferring the title of land or property is a complicated process, whether you are selling it to a buyer or gifting it to a loved one. That’s why it is necessary to have a real estate lawyer’s guidance and support during the process. Hopefully, we were able to shed some light on essential points of land ownership transfer. But make sure you consult a legal professional to learn more details.