Who Should be on Title?

When buying a house, you must decide whose name will go on title. Will you be the sole owner? Should you be on title at all? Will you and your spouse go on title together? If so, will you be joint tenants or tenants in common? What about your children?

What is the difference between Joint Tenancy and Tenancy in Common?

Joint Tenancy means that two or more people own property in equal undivided portions, with an equal right to use the whole property. When one joint tenant dies, the property is transferred to the surviving joint tenant immediately before the moment of death. This means the property does not become a part of the estate of the person who died and the property will not be subject to probate fees, will not be taxed as a part of the estate and will not be distributed among the beneficiaries of the estate.

Joint tenancy is generally preferred for most spouses.

If two or more people own property as a Tenancy in Common, it does not have to be divided equally. Tenants in Common can own different proportions of the property, for example ¼ and ¾, and they can sell or mortgage their portion as they please. If one tenant in common dies, that person’s share of the property becomes a part of the deceased’s estate. It is subject to probate fees and it will be distributed to the beneficiaries of the deceased’s estate. As you can imagine, property can be a difficult thing to “distribute”.

Tenants is generally preferred for blended families and other unique arrangements (like a shared vacation cottage).

Can I hold title in only one name, excluding my spouse or common law partner?

Having title in your name does not always mean you are the only one with an interest in the property. If you are in a relationship and have been living together for at least two years, your partner may have a claim to part of the property even though they are not on title.

If you are a self-employed professional, you want to protect your assets from any business creditors. Some people attempt to protect their assets by placing title in their spouse’s name or have title held by a holding company.  This protection is not absolute and most bank will require a spouse to, at the very least be a Guarantor or Covenanter on the Mortgage.

What about going on title with my Adult Child ?

If you are thinking of holding a property in joint tenancy with an Adult Child for estate planning purposes, you should consult a lawyer. There can be many unintended consequences and pitfalls for such an arrangement. For example:

-loss of control: you cannot sell or mortgage without the consent of the child

-taxes: there may be capitals gains consequences for the parent or the child

-property transfer tax: depending on whether the property is a principal residence, you may have to pay property transfer tax

-creditors: the property will be at risk to claims by the child’s creditors

-uncertainty: it is possible that you may not be successful in creating a joint tenancy if the child does not live in the house. The joint tenancy may be unintentionally severed by a number of events.

Property Transfer Tax: First Time Home Buyers

First time home buyers get an exemptions from paying the property transfer tax and this "tax break" can save FTHB thousands of dollars. However, First Time Home Buyers need to carefully ensure that they qualify for this tax savings. Persons claiming a FTHB credit are regularly audited by the PTT Office.

The Criteria to Qualify are as follows;

Purchaser must:
a)  be a Canadian Citizen, or a permanent resident as determined by Immigration Canada,
b) have lived in British Columbia for 12 consecutive months immediately before the date
you register the property, or you have filed 2 income tax returns as a British Columbia
resident during the 6 years before the date you register the property,
c) never owned an interest in land anywhere in the world at anytime,
and
d) you have never received a first time home buyers’ exemption or refund.

The Property you purchase must also qualify as follows:
a) the price must be less than $425,000
b) the land must be less than 0.5 hectares (1.24 acres), and
c)  the property will only be used as your principal residence.

Importantly, if you sell the property or acquire a new principal residence within 12 months of purchase, you will lose the exemption and the Province will demand for the tax to be paid.

More information here:
http://www.sbr.gov.bc.ca/documents_library/brochures/firsttimehomebuyer.pdf

Key Supreme Court of Canada Case for Developer Disclosure

In the last few years, there had been a landslide of litigation over pre-sale contract under the Real Estate Development and Marketing Act. In a recently released Supreme Court of Canada case (Sharbern Holding Inc. v. Vancouver Airport Centre Ltd., 2011 SCC 23) , the Supreme Court critically defines what information is "material" and gives rise to a disclosure obligation what does not.

Under the terms of the Real Estate Act (now the Real Estate Development and Marketing Act), a Developer MUST disclose all material information, which means:

"Information is material if there is a substantial likelihood that it would have been considered important by a reasonable investor in making his or her decision to invest. In other words, information is material if there is a substantial likelihood that its disclosure would have been viewed by the reasonable investor as having significantly altered the total mix of information made available."

One of the critical points here is that the standard is that of a "reasonable investor" meaning that it is an objective test, and not subject to the variety of factors which may motivate individual purchasers.

Critically Developers who make a false statement in a disclosure statement will be provided a defense where:

"the statutory defence contained in s. 75(2)(b)(viii) of the Real Estate Act would preclude [a developer] from being found liable under s. 75(2). To rely on the defence, [a developer] had to show that it subjectively believed the representations it made were true and that it objectively had reasonable grounds for such a belief."

Developers who use and reasonably rely on experts to produce the information in their disclosure statements may have a defense under this provision.