Relationships in real estate: How is your home owned? Who is on title?
OTTAWA -- “What's in a name?” asked William Shakespeare in the late 1500s.
That question was about love and heartbreak.
In 2021, not only could your heart be broken, but your bank account too, if your name is not properly listed on the title of your home or property.
Taylor Bennett, of Bennett Property Shop Realty, is a regular contributor on CTV Ottawa’s News at Noon and he thought this topic would be relevant for viewers since he just recently dealt with it personally.
“My girlfriend and I recently moved into our new home and we had to consult a lawyer to make sure our homeownership agreement was clear and set up the way we wanted,” explained Bennett.
Taylor acknowledges buying a home can be an exciting event, and dizzyingly busy, as one organizes everything from the mortgage to the movers, but he says one of the most important steps is often overlooked—the transfer of title/ownership.
This is something arranged by your real estate lawyer.
Bennet says there many ways the ownership or title of a property can be held: sole ownership, joint tenants, tenants-in-common, to name a few.
“The specific type of ownership would primarily depend on the intended use, the type of property, and the parties' individual financial status.”
Bennett says each type of ownership has its own advantages and disadvantages.
“Before making the most expensive purchase you will likely ever make, it's important to know what type is best for your situation. Not only will the type of ownership make the relationship and responsibilities of each party clear, but it will save everyone from unnecessary legal headaches when the property has to be sold.”
Taylor Bennett on Relationships in Real Estate:
Most Common Scenarios
- Married or Unmarried Couples
- Business Partners
“In today's world there are all types of groups buying and acquiring homes together. Many couples aren't waiting to get married before buying a home, siblings are grouping up to buy investments or have taken over ownership of their family home, business partners are taking on investments together.”
If the relationship, or financial status of the owners changes, (e.g. a partner loses their job, a divorce, a death), the type of ownership can change as well.
Most Common Types of Ownership
- Sole Ownership
- Joint Tenancy
“While these are the most common, there are other agreements that can be put in place - a partnership agreement, a property held in trust. These types of ownership are often much more complex and consulting a real estate lawyer would be recommended,” Bennett says.
- Title is held in one name only
- Very common among senior homeowners
- Beneficial if one partner is self-employed or had credit issues
“Since the title is held in one name, that person or corporation is solely responsible for that property,” says Bennett.
“This is very common for senior homeowners if they are a widow, or their partner is incapacitated. It's also very common if a partner is self-employed or has had credit issues preventing them from getting a mortgage. In the future, if the financial situation changes, a joint tenancy or tenants-in-common agreement can be set up.”
- The most common way for couples or spouses to hold ownership
- Between two or more parties
- Each owner has an equal right to the property
“Whether married, unmarried, or common-law, this is the most popular type of ownership arrangement. One of the main advantages is that the financial burden is shared among all parties, not on one individual. Also, in the event of a death, this type of setup avoids probate and additional taxes.”
- Each owner owns a specific percentage of the property
- Equal rights & access for each owner
- Individual ownership protection
“In this agreement, each party owns a pre-determined amount. For example, Jack owns 30 per cent and Jill owns 70 per cent, and each portion is protected from the other,” Bennett says.
“If someone put a lien against Jack, Jill's portion wouldn't be impacted. While their financial responsibility is split, just like with joint tenancy, each party is entitled to access 100 per cent of the property, 100 per cent of the time (it wouldn't be very fair for Jack to only get to use 30 per cent of the home, or use it 30 per cent of the time). This type of agreement is more commonly used when one party is contributing much more than the other(s).”
Make the Write Choice
- Get it in writing
- Consult an expert
- Reassess, Review, Revise
“Whether you're buying your first home or you're already a homeowner, if you are unsure about your ownership status, consult your lawyer or purchase documents and make sure it accurately represents your current situation,” says Bennett.
“And as your financial position changes, make sure to reassess your ownership agreement. Buying a home with a loved one, friend or partner can be an exciting step, but eventually, that property will likely have to be sold and that could be a very emotional event (a death, a divorce), which is why it's wise to plan ahead before emotions are involved.”