Title and Ownership of Property Explained

Property Titles: What are they, and how do they work?

A property title is both the actual document proving your legal ownership of a property, and a more general reference to your ownership of the home (e.g. I hold the title to this property). While a property title technically grants you control of a property, this authority is not always unlimited, and often comes with exceptions.

In Canada, titles are registered under a provincial land registration system. There may also be a municipal system in place to track ownership of property documents. There are different types of titles, for instance:

Under a freehold ownership, you own both the building and the land it sits on. This is the most common type of title in Canada.

A leasehold ownership, on the other hand, is typically used to buy and sell property on Crown lands or Native reserves. Under this title structure, you can purchase the building, but you do not technically own the land underneath. In Canada, the length of this “land lease” is typically around 99 years, and can be renegotiated or renewed.

There is also a new category of title ownership that has emerged in the past few decades. Condominium owners hold the title to their individual housing unit, but they have shared ownership of common areas and facilities within the condominium complex.

In Ontario, a property title search is usually conducted during a home sale process to verify that the home seller is actually the legal owner of the property, and has the right to transfer ownership to you (the homebuyer) through a title of property transfer.

Claiming ownership of property isn’t always as simple as paying the mortgage . In Canada, there are many different types of home ownership, and each has its respective pros and cons. Below, we’ve compiled the three most common categories of home ownership (sole ownership, co-ownership, and in trust ownership), to draw a quick comparison of their purpose, pros, and potential cons.

Sole Ownership

A sole ownership is simple; the owner of the home is the only person who holds the title to the property. This is also sometimes called registered ownership. A title can be legally transferred through a home sale, a will, or through certain contracts.

The main advantage of being a sole owner is that buying and selling the home is very easy. No one but you needs to sign off on any property-related decisions (sale, purchase, etc.), and you get to keep all the income generated by your home (after taxes).

On the flip side, applying for a sole-owned home may put a cap on your mortgage. It is a lot easier to qualify for a larger loan when you have higher income, and in most cases, two (or more) incomes are greater than one. You also will need to write a will in order to guarantee the home passes onto your family / successors, as it cannot automatically pass to a co-owner.

Co-Ownership

Co-ownership occurs when multiple people buy a property together. There are a few different types of co-ownership that each come with their unique risks and benefits:

• Joint Tenants: In a joint tenancy, all owners have an equal share of the home
  
  • This is usually used by spouses in Canada to avoid having to go through a court process if one partner passes away. In the case of a joint tenancy, the property would automatically pass onto the living partner without the need for a will / legal proceeding
    
  • All owners must agree on any decision (sale, purchase, etc.) for it to be valid
    
• Tenants in Common: Under tenancy in common, owners can own unequal portions of a property (e.g. 30% and 70%)
  
  • Each owner can use their specific part of the home as collateral for their personal loans. This can increase your personal financial flexibility
    
  • Owners can also each specify an heir for their part of the home (usually through a will). If one owner passes, their part of the property doesn’t automatically get passed onto the other owner
    
• Co-operative: A co-operative is a type of co-ownership where multiple people own parts of the corporation that owns a property.
  
  • Uncommon for residential properties
    

Land Trust / In Trust

In a land trust agreement, the trustee will take ownership of a property (through title registration) on behalf of the beneficiary (who is the actual owner of the home). Through a trust agreement, the beneficiary will set out rules for the trustee, who is to manage the property on their behalf.

The main goal of land trusts is to obscure the true owners of a property, since title registrations are public information. High-profile individuals may want to keep their net worth private, or to separate their properties from their other assets.

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Choosing the Right Ownership Option for You

"I always ask clients to think about what they want from the property; are they buying a family home, an investment, or something they’re sharing with others? If you’re looking to leave the property to specific people or split ownership unevenly, tenants-in-common could be a better fit for you. But if you’re a couple and want the property to automatically go to your partner, joint tenancy usually makes the most sense."
- Linda Mac , Underwriter & Mortgage Broker Level 2

“ The best way to figure out ownership options is to start by having conversations. Talk to a Clover Mortgage broker, your lawyer, or even your realtor—they can explain the tricky terms and give advice that fits your situation. There’s also a lot of helpful information online, like government resources from CMHC or simple guides and tools designed for first-time buyers.”
- Steven Crowe , Mortgage Agent Level 2

Regardless of your circumstances, consulting with a trusted mortgage broker and legal professional is key to making the right decision for your unique needs. Do you need title insurance? How can you add your wife to your property title? How can you check the title of your property? Contact Clover Mortgage today to get started with a free consultation.

FAQ

What is the difference between title and owner?

A title of a home represents its legally registered ownership. More broadly, the title of a home usually refers to an ownership document, and the owner of a home usually refers to the person listed in the title document. However, land trusts (and other vehicles) may allow for the title of a home to represent a trustee instead of the “true owner.”

Can one person sell a house with two names on the title in Canada?

If there are two names on the title of a home, both parties must agree before the house is sold. For this reason, sole ownership can be more convenient in certain circumstances. An exception to this rule is that in some cases, one owner of the home can provide the other with explicit legal authority to make decisions on their behalf. In this case, one person could theoretically sell a house with two names on the title.

What are the different types of property ownership in Canada?

There are many different types of property ownership in Canada. If you are looking to classify different types of homeownership based on the number of owners, the main categories include:

• Sole Ownership : you take on all rights and risks associated with the property
• Co-Ownership: you split all rights and risks associated with the property
  • Joint Tenants: 50 / 50 split (or equivalent split across multiple people)
  • Tenants in Common: unequal ownership split between parties
• Land Trust: a guarantor can create a trust for the owner of a property (the beneficiary). This property is then passed onto the trustee, who manages the property on behalf of the beneficiary, and legally registers themselves on the title of the home

If you are instead looking for a split based on legal entitlement to the property, the three main types are as follows:

• Freehold Ownership: you own the building and the land it sits on
• Leasehold Ownership : you own the building but not the land. You are technically leasing the land from the Crown or the Native reserve you reside in
• Condo Ownership: you own the building and part of the land it sits on (you have full ownership of your unit, and partial ownership of common areas / facilities)

Can you be on the title but not the mortgage in Canada?

Yes, you can be on the title but not on the mortgage. Just because you have legal ownership of your home (through title registration) does not mean you have to be responsible for making the mortgage payments. Many families or couples choose to buy property together or split ownership, even if the payments are not being made by all parties. In Canada, it is possible to have ownership rights without taking on financial liability for the loan.

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