Pros and Cons of Adding a Child to a Property Title


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Property TitleBuying a property can be compared to a chess game. When you are signing your ownership documents, you need to think seven steps ahead of you – property taxes, mortgages, lending possibilities, proper documentation, legal situation, possible risk and losses, and property sale.

As my practice shows, people are constantly wondering if adding a child to a title property is a good practice.

Well, every situation is different, and usually a will is enough for your kids to inherit your estate. Nevertheless, there are situation when a will can be contested, so in order to save trouble, adding a person to your will is a common practice.

However, before you do that, you should keep in mind that every action can have consequences in the future.

Equal Liabilities

Adding another person as property owner means that you will share an equal rights and liabilities in regard to your property. This means, that if another owner will ever experience any financial difficulties caused by divorce, bankrupt or a lost lawsuit, you may lose your property or part of it.

Mortgages Situation

If you have a mortgage on your property and willing to add another person as an owner of the house, you must obtain authorization from your mortgage lender. In some cases, it means refinancing your real estate.

Taxes Increase

If your child is added as a joint owner of the house, and you are willing to sell your property, your child must legally pay a capital gain tax if this property fail to appear his/her principal residence.

Documentation Process

In case you want to add your child as a second owner, you need to make sure all documentations are correct and legit. Canadian law states, that when parents add children to property title, it should be properly proved as a “true” joint ownership. Until then the ownership will be held in trust.

Will and Property Title

Another important thing to consider is a consultation with a lawyer regarding home ownership and your will. You need to make sure that your estate planning and testimony are “on the same page” and correspond to your current legal situation. This is essential for those who have more than one child, but added just one to the property title.
When preparing a will and mentioning a real estate that has a joint ownership, keep in mind that you hold the balance only of a half of estate. All your valuable personal items and savings should be mentioned in a will as well, as a lawyer’s practice shows this is one of the most common situation that leads to lawsuits.

It is important to remember, that to add a person to a title is much easier and quicker process, then removing them later. Therefore, it is a safe practice to consult with a real estate lawyer before making any rush decisions.
MLK Law have a great deal of experience in preparing testimonies and property titles. If you have any questions or doubts and require a consultation, contact us – we will be happy to help!