Property transfer process and fees

The process of buying and selling property can be confusing, and transferring property comes with its own set of rules and requirements.

If you own real estate and want to transfer it to someone else, you’ll need to change the title on the deed to reflect that. There are 2 main ways to do this — a quitclaim deed and a warranty deed — and the one you choose depends on who you’re transferring the property to, why you’re doing it, and what kind of tenant you are.

What is the process for transferring the property to someone else’s name?

To transfer property smoothly and successfully, follow these steps:

1. Discuss the terms of the deed with the new owners.
   This involves clarifying tenancy between the property owners. Will it be a joint tenancy or a tenancy in common? Most family members prefer to hold property as joint tenants with a right of survivorship. This allows the property to pass to the remaining owners without an expensive probate.
2. Hire a real estate attorney to prepare the deed.
   While you can technically do this yourself, it can be complicated, especially if you’re preparing a warranty deed. The deed needs to be accurate, so it’s worth investing in an attorney to guide you.
   The deed includes personal details about you and the family member to whom you’re transferring your title. It also has a legal description of the property — you can use the description in the government plats or your original deed, if you have access to it.
3. Review the deed.
   Read over the deed and double-check that all information is accurate and complete. Be sure that the seller and buyer have entered their full legal names and correct addresses, and pay special attention to the legal description.The form will have blanks for signatures, but don’t sign these yet.
4. Sign the deed in front of a notary public, with witnesses present.
   The deed must be signed by all sellers in front of a qualified notary public and any other witnesses required by your province’s law. It then needs to be notarized with a signature and seal. The buyer doesn’t have to sign anything.
5. File the deed on public record.
   To complete the property transfer, take the deed to the local land registry office to be filed. This is called “recording the deed,” and failing to follow through with this step can cause problems later on because no one would know about your relative’s claim to the property. At this point, you may need to pay fees and taxes associated with the deed. By the end of the day, the land registry should have the buyer on file as the new owner.

What kind of paperwork will I need?

When you’re transferring ownership property, you’ll typically need to fill out two forms:

• A quitclaim deed form. This asks for the value of your home, location of your home and a legal description (property dimensions and boundaries) of the property.
• Land transfer form (form name varies across provinces). If you’re the owner who’s intending to keep the property, you’ll complete this form.

You can get these forms from your county recorder’s office.

What is a quitclaim deed vs. a warranty deed?

To sign over property ownership to another person, you’ll use one of two deeds: a quitclaim deed or a warranty deed.

Quitclaim deed

This transfers any ownership interest the grantor (seller) has in the property, but it doesn’t make promises about whether the title is good and if anybody else owns the property. Basically, it says, “I’m transferring to you whatever interest I have in this property, but I’m not guaranteeing anything about this claim.”

When you sign a quitclaim deed, you’re effectively giving up — aka quitting — your claim or rights to the property. No money or warranties are exchanged, so it offers a pretty low level of buyer protection. Since they’re risky, quitclaim deeds are usually used to transfer property among family members or between spouses after a divorce. They’re also used to clear up title issues, transfer property to a trust and gift property to someone.

As a seller, it safeguards you from being sued by your family member, spouse or future buyer later if it turns out there’s an issue with the deed or you didn’t have full ownership of the house.

Quitclaim deeds are often, mistakenly called “quick claim” deeds for their speed and simplicity. While that’s incorrect, it’s useful when trying to wrap your head around the concept.

Warranty deed

This property transfer comes with legal assurances. It states that you, the seller, have the right to transfer the property and explicitly says that nobody else owns it. It also asserts that there are no debts or liens on the property. In other words, a warranty deed says, “I promise that I’m the rightful owner of this property, and the title to it is good.”

Warranty deeds are typically used for real estate sales. They legally protect buyers from title challenges. Unlike quitclaim deeds, someone who signs a warranty deed knows they won’t face unpaid taxes or creditor liens later down the line.

What is a joint tenant vs. a tenant in common?

They’re both forms of property co-ownership. When 2 or more people purchase property together, the attorney asks how they will hold title: as joint tenants or tenants in common.

Joint tenants have equal shares of the property with the same deed and at the same time. This type of holding title is common between married couples and family members. It can be broken if one of the tenants transfers (or sells) their interest in the property to another person. At that point, the title is converted to a tenancy in common.

With tenancy in common, the owners may have different ownership interests. For instance, Tenant 1 might own 50% of the home, while Tenant 2 and Tenant 3 each own 25%. Tenancies in common can also be granted at different times. To use the same example, Tenant 3 might obtain interest in the property years after the others signed off on the title. A tenancy in common can be broken if one or more of the co-owners sells their stake or buys out another tenant’s interest in the property, or if the property is sold.

While joint tenants and tenancy in common are similar in that the co-owners have rights and duties to the property, the key difference revolves around what happens when a co-owner dies.

When a joint tenant dies, their interest in the property is automatically — and equally — transferred to the surviving owners — the right of survivorship.

Tenants in common have no rights to survivorship. They don’t inherit any shares after a co-owner’s death. The deceased tenant’s interest in the property passes to their heirs or the people named in their will.

What fees could I potentially pay?

Transferring your rights to a property doesn’t mean you’re off the hook with fees and charges. While they vary between provinces and territories, be prepared to pay the following fees:

• Transfer tax. The seller typically has to pay a transfer tax on the property, which is imposed by the province. The tax you’re charged depends on your province and city, but it’s usually around 1-2% of the home’s purchase price. However, if the county reassesses the value of your property at the time of transfer, the person taking over ownership may end up paying higher property taxes.
• Deed preparation fee. This covers the costs of drafting the document that transfers the title from the seller to the buyer. Usually, the seller pays this fee at closing, but it’s not unusual for buyers to pay the attorney directly.

• Title insurance. Buyers sometimes purchase title insurance – at times, because their mortgage lenders require it. Title insurance protects them from any issues with the home’s ownership history later on. Also, sellers often buy a title policy for the new homeowner. Overall, costs can range from between $100 and between $500.
• Recording fees. When you file your deed with the county recorder’s office, you’re charged a fee, which can often fall between $65 and $85. This is based on the value or sale price of the property, as well as the number of pages and documents. Typically, the buyer pays this fee upon filing.

How to avoid fees and charges when transferring property

There are a few situations where you may be able to reduce fees and charges associated with a land transfer.

Transfer property in a province that doesn’t charge a transfer tax.

Every province charges a land transfer tax except Alberta and Saskatchewan, which charge a relatively small fee instead. While land transfer taxes often end up costing several thousand dollars, the fees charged in these provinces often run between several hundred and a couple thousand dollars.

In Alberta, the fee has two components as follows:

• $50 + $1 per $5,000 increment of property value
• $50 + $1 per $5,000 increment of the mortgage amount.

For example, if a home valued $350,000 was purchased for $325,000 (all of which was paid for with a mortgage), the land transfer fee would end up costing $120 for the property value component plus $115 for the mortgage component. In this case, the total fee would equal only $235.

In Saskatchewan, the fee you pay falls into one of 3 tiers based on the purchase price of your property:

• $0 fee if the purchase price is $525 or less
• Approx. $25 if the purchase price is between $525 and $8,800
• 0.30% of the property value if the purchase price is over $8,800

So, if a $350,000 home was purchased for $325,000, the fee would be 0.30% of $350,000, which is $1,050.

Take advantage of first-time buyer benefits

If you’re a first-time home buyer, you may be able to get a refund on part or all of the land transfer tax you paid, depending on where you live. Often times, this benefit is only available to those who have never purchased a home anywhere in the world, not just in Canada. There may also be a limit on the amount that can be refunded.

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Does transferring the property to someone else’s name affect the mortgage?

No, transferring a deed to another person doesn’t remove your responsibility to pay the mortgage on the property. As the original owner, you’re still obligated to make the payments to your lender — even if you’re divorced and don’t have an interest in the property.

The only way to free yourself from the mortgage is if the new owner is approved for a loan to pay off your lender’s lien on the property.

How to remove someone from a property deed

Can I cancel my property transfer quitclaim deed once it’s signed?

No, once the quitclaim deed is signed, notarized and recorded with the county office, it’s a legally binding document. You can’t cancel it unless you can prove in court that the deed was the result of fraud, threats or illegal pressure. If you go down that route, you’ll need an attorney.

While a quitclaim deed can’t be nullified, if the seller agrees to take back the property, the buyer can draft and file a new quitclaim deed. This voids the first deed and returns the property back to the original owner.

Bottom line

Your property is an asset, and transferring ownership can be time consuming. There are a few paths to take, but quitclaim deeds are commonly used to turn over any interest you have to a trusted person, like a family member or friend.

To learn more about the ins and outs of property ownership, check out our comprehensive guide to mortgages.

Frequently asked questions

• If I give my children property as a gift, do they have to pay a gift tax?

  No. Canada does not have a gift tax, so the CRA won’t charge your children tax specifically because they received your property as a gift. However, if the property generates some form of income, this will have to be declared and income tax must be paid.

  Note that there could potentially be a tax advantage to giving away property-generating income to your children before you pass away, because it could potentially cut down on taxes your estate will be charged. Speak with a tax professional to find out what property conveyance options are best for your situation.

• Is it possible to transfer a deed to your house to your children before you die?

  Yes, you can legally transfer the deed to your house to your kids before you die. To do this, you’ll need to sign a deed transfer and record it with your local land registry office. The most common is the quitclaim deed, but some parents opt for a “Transfer on Death” (TOD) deed, which comes into effect after you pass away.

• Can you transfer the deed to a house with a mortgage?

  Yes, although you may still be responsible for the mortgage payments. To get rid of that obligation, the new owner has to apply and be approved for a loan to pay your lender.