Sometimes shares or interests in real estate are transferred in the absence of a standard sale/purchase transaction. There are many reasons for this, such as when an owner or co-owner of real estate dies, or when a relationship breaks down and the parties have reached a property settlement or court orders have been made. Shares in property may also be transferred for the protection of assets or where property is gifted to children or other family members.
While the idea of transferring the whole or a share in property might seem simple, there are usually legal and financial implications to consider. The transfer of property can trigger tax and stamp duty liabilities, so it is essential to get the right advice up-front and complete the correct documentation.
We can complete the necessary documents for the assessment of transfer duty (or duty concession) and to register the transfer. When transferring property, you may also want to speak to your accountant to ensure that you understand any tax-related issues such as capital gains tax and the financial effect of your proposed transfer.
Property transfers and ownership interests
The way in which a legal interest is held in property is an important consideration when buying, selling, or transferring real estate.
A joint tenancy is subject to survivorship provisions – when one owner dies, the other owner or owners automatically inherit the deceased person’s share, notwithstanding any contrary terms in a Will. Property held as tenants in common can specify the individual shares held by each owner (for example 50/50 or 30/70). In such cases a co-owner can transfer, sell, or leave his or her share to a beneficiary by Will.
It is important to obtain legal advice regarding property co-ownership to prevent unintended outcomes in estate planning and to protect interests should future disputes arise. Disputes can be triggered by financial stress or breakdowns in personal or business relationships. While joint tenancies are generally appropriate for domestic partners, this may not always be the case.
If you have purchased property with another party, at the time of purchase you will have elected to purchase as joint tenants or tenants in common. If you are a joint tenant and wish to leave your property to somebody other than the other tenant, it is necessary to sever the joint tenancy first. This can be done by filing the appropriate form, depending on whether all tenants agree to sever the joint tenancy or if only one tenant wishes to do so. These matters are not always straight-forward.
Where a deceased person owned real estate, it will be necessary to take steps to transfer that property to either the surviving proprietor, where the property was held jointly or to the executor if the property was held as sole proprietor or as tenants in common. In the absence of a joint tenancy and/or Will, the property will be transferred according to the laws of intestacy.
Where property is to be transferred following the proprietor’s death, an application must be made with the Land Titles Office. The correct form to be used and duty payable (if applicable) will depend entirely on the circumstances and the role of the party receiving the property (the transferee).
After a marriage or de facto relationship breaks down, property may need to be transferred between parties as agreed or consistent with an order of the court. In these circumstances, you may be entitled to an exemption from stamp duty. To claim the exemption, your agreement to transfer property must be documented in a complying binding financial agreement, or consent orders from the court.
Property transfers other than a standard sale and purchase can arise for various reasons. Some are relatively straight-forward, however some can be quite complex, particularly where the transfer follows a relationship breakdown or dispute between the owners. In all cases, we recommend seeking legal advice to ensure you avoid any pitfalls and understand the implications of your transfer.