RESOURCES

When someone close to you passes, in addition to the emotional trauma—there is the added responsibility of dealing with the deceased’s financial affairs. When it comes to real estate holdings—if the property is held by more than one party, the starting point is to establish how title is held.

It is vital to establish how multiple parties hold title to real property during the purchase stage, as well as re-assessing your interests in said real property during your lifetime in the event that circumstances change.  For the issue of the manner of holding title to real estate property by more than one person becomes paramount upon death. Title is either held as “Tenants in Common” or “Joint Tenants”.

If the Deceased held title to a property as Tenants in Common with another person, the Deceased’s interest goes to the Estate of the deceased and not to the other owner. As such, a Certificate of Appointment of Estate Trustee (“Probate”) would be required in order for the Estate Trustee to obtain the authority to transfer title to the Deceased’s interest in the property. An Estate Administration Tax, which is a fee charged by the Court to “probate” an estate based on the value of the estate (including real estate if any that was not held by a Joint Tenant, less any outstanding mortgages), is payable. The current rate effective as of January 1, 2020, is:

• $0 per $1000 of assets up the first $50,000
• $15 per $1,000 on value over $50,000.00, with no maximum

Depending on the Court Jurisdiction, their workload, etc., the process of obtaining Probate may take many months. In the event that a sale of real estate belonging to the Deceased is imminent, the Court may speed up the process but there is no guarantee that such will be the case. The person applying as Estate Trustee can list a property for sale and even sign an Agreement of Purchase and Sale. However, it is essential to make any Agreement of Purchase and Sale conditional upon obtaining the “Probate” as the closing of the sale cannot be completed without the Estate Trustee being granted the authority to sign the closing documents by the Court.

If the Deceased held title to a property as Joint Tenants with another person, the real estate passes on to the surviving joint tenant. The same right of survivorship principal applies to non- real estate assets as well, such as joint bank accounts and joint investment accounts. A relatively simple Survivorship Application will have to be registered on title before the property can be either refinanced or sold which basically confirms that title belongs to the survivor as a result of the death of the other joint tenant. As such the value of the real estate is not subject to the Estate Administration Tax as Probate is not required to transfer title to the property.

Kormans LLP is available to provide you with our legal expertise and guidance in selecting your strategic options for acquiring real property and with respect to your options and the processes upon the death of an owner.

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David H. Korman is the Managing Partner at Kormans LLP. His practice areas include residential and commercial real estate transactions, commercial leasing and private and institutional lending. You can reach David at dkorman@kormans.ca. The information and comments herein are for the general information of the reader and are not intended as advice or opinion to be relied upon in relation to any particular circumstances. For particular application of the law to specific situations, the reader should seek professional advice. Kormans LLP cannot be responsible for the content of other sites. We expressly disclaim all liability with respect to actions taken or actions not taken based on content received from a third party website linked, directly or indirectly, to that of Kormans LLP.  The link to another site is not to be construed in any way as an endorsement of the host, the site or the information contained therein, nor is such link to be inferred as an association or affiliation with the host.