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How to transfer your house title after divorce
When you get a divorce and want to keep the house, transferring the title of ownership is just one process you'll need to undertake.
Of all the assets owned by a married couple, property can become the most contentious to divide during a divorce, especially if you or your spouse are interested in assuming ownership of your family home. When it comes to divorce in Canada, both spouses have an equal right to the home, regardless of whose name is on the title. If you or your spouse want to keep the family home, you’ll need to buy the other spouse out, release them from the mortgage and have them removed from the home’s title.
Home ownership in marriage and divorce
When two people marry in Canada, they often bring in and accumulate assets during their marriage. One party may bring in or purchase an asset or both parties may jointly purchase an asset over the course of their union. During a divorce, regardless of who bought what, the total value of the estate is divided equally between the divorcees, according to Canadian law.
This means that if two married individuals share a house together, the value will be split equally between both parties regardless of who paid for what. The process of splitting assets during divorce is quite complex. Both parties need to reach an agreement on how to transfer ownership of the shared home during the divorce proceedings. Unfortunately, this is a moment when conflicts can arise.
In general, there are four common ways to transfer ownership of your home during divorce:
- Agree to sell the property and equally divide the proceeds.
- One spouse buys the other spouse’s half, thereby assuming home ownership.
- Maintain joint ownership and use it as a rental property.
- Divide the property into two units where each spouse continues to occupy their designated space.
For more information on other kinds of property transfers and related fees, check out Finder’s guide.
What is the process of assuming ownership over the house?
As with all real estate decisions, talk to your attorney, a tax professional or another expert to determine your specific responsibilities when determining how to transfer your house title after divorce. While this is not an extensive list, if a transfer of ownership is required, you’ll face three big tasks:
- Buying out. Since both spouses legally have a right to the home, one party will need to be bought out. While you can split the value of your home 50/50, the ultimate decision will lie with what is stated in the separation papers. Luckily, both you and your spouse decide how to split the assets – but keep this in mind when you begin dividing assets. You’ll need to pay your spouse a lump sum to buy them out, or you may need to remortgage your home to afford to buy them out. This means your mortgage could increase drastically.
- Remortgaging. You’ll need to remove your ex from the mortgage and you’ll then need to refinance your mortgage. Since you’re now a single individual on the title, your own income and financial situation will determine your new mortgage offer. If you have a big mortgage, or you’ve had to remortgage your home to buyout your ex, your lender may decide that you can no longer afford the repayments on your own. You’ll need to take into account your capability to pay off the mortgage on a single income when choosing to stay in the family home.
- Transfer of house title.After you’ve been approved for your new mortgage, you can then remove your ex from the title. This requires visiting an attorney with your title ownership, drawing up new papers, jointly signing them and returning them to your attorney who will then file them publicly. Your spouse will need to sign a quit claim deed, which basically relinquishes them of all rights to the home – including ownership and being liable for mortgage payments.
What kind of paperwork will I need for a transfer of my house title?
The transfer of property upon divorce requires a visit to an attorney, like most property transfers. They will walk you through the process which will involve drawing up new papers, coming to an agreement and jointly signing. Aside from providing personal information and presenting your ID, typical paperwork that you’ll need will include:
- Separation papers. You’ll need to provide a copy of your separation papers.
- Home title. You’ll need to produce the home title so the attorney can draw up a new one and file it to complete the transfer of ownership.
- Quit claim deed. This signed paper relinquishes your spouse of any rights to the home.
Looking for a mortgage? Compare mortgages in Canada
Will I need to pay land transfer tax?
Yes, if you’re assuming ownership of the home, you’ll need to pay land transfer tax. However, if you have a proper separation agreement drawn up, you won’t have to pay land transfer tax.
Legal documents you might come across
Here are some of the most common legal documents you’ll come across when dealing with your property and transfer of ownership after divorce:
- Quit claim deed. This relinquishes the other spouse of any rights to the house including ownership or any liability to pay the mortgage for the home.
- Deed of Trust to Secure Assumption. This legal document gives you the right to foreclose and allows you to take back ownership of the house if your spouse doesn’t refinance the mortgage and as a result, defaults on the mortgage.
- Assumption agreement. If you’re able to assume the mortgage (without refinancing), your spouse will need to sign an assumption agreement which releases them of any liability to pay the mortgage. Not all mortgages are assumable, so you’ll need to contact your lender and find out before you attempt to take this route.
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