Is Probate really necessary? Not if it is the “First Dealing” of the Property since Conversion

Several years ago the Province of Ontario changed from the Registry System to the Land Titles Conversion Qualified (LTCQ) system for the registration and searching of real estate title (ownership).  The Registry Systems was a paper system, whereas, the LTCQ system is an electronic system, which provides efficiency in searching and registering title and provides assurances that the title registered is valid title, due to the fact that there is no concern of duplicate entries, as was prevelant in the paper Registry System.

If a transfer or sale of a property is being completed and a deceased party is registered on title it is important to know whether or not probate is required to be completed, as the cost savings from not having to complete probate can be substantial.

It is important to know that probate does not have to be completed on a property where it is the first dealing of the property since it has been converted from the Registry System to LTCQ.

The First Dealings Exemption is available in instances where the deceased party on title acquired the property while it was registered under the Registry System and continued to be registered on title, uninterrupted, after it was converted to LTCQ. This First Dealings Exemption would continue to apply as long as the deceased did not transfer their ownship of the property, so the fact that they registerd and discharged mortgages after they acquired the property would have no effect.

The First Dealings Exemption would continue to apply in the instance that a joint tenant, who was registered on title previously with the recently deceased, passes away and a survivorship application was completed to transfer the title solely into the ownerhsip of the recently deceased. Lastly, transfers of title between spouses due to the breakdown of the marriage would not result in the First Dealings Exemption being lost. However, if there is no valid Will and Last Testament then such discrepancy will vitiate the usage of the First Dealings Exemption.

Separation and the Matrimonial Home

Separation and the Matrimonial Home

On separation, parties often have to make hard decisions regarding how they will split assets, who will pay support, and how they will move on from the relationship.  At this time, one of the most contentious and difficult items to deal with is the Matrimonial Home.  Who gets to keep it? Will the kids remain there? Do we have to sell it? How much equity do we each get?

The matrimonial home is such a significant asset of the marriage that there is a whole section of the Family Law Act (FLA) devoted just to it (see part 2 of the Family Law Act) 

Keep in mind that these provisions only apply to Married spouses (see CL vs. Married spouse post).  Common law couples only have property rights as far as their title interest goes.  If you are common law, and you are not on title to the property, you will have to consider other equitable remedies such as a constructive trust or resulting trust claim through litigation if you want a part of the home.

First, it’s a good idea to understand what the matrimonial home is.  S.18(1) of the FLA defines a matrimonial home as:

Every property in which a person has an interest and that is or, if the spouses have separated, was at the time of separation ordinarily occupied by the person and his or her spouse as their family residence is their matrimonial home.

What’s interesting here is that more than one home can qualify as a matrimonial home.  This means that if you own a cottage that the family uses regularly at the time of separation, this could be considered a matrimonial home as well.

So what if you moved into a home different from the one you lived in when you got married? Remember that this rule applies to properties that at the time of separation were ordinarily occupied by the person and their spouse.  Any other property you owned during the marriage that you no longer live in ordinarily is treated differently.

What if you have property outside of Ontario? Do we apply the same “matrimonial rules”? Unfortunately no.  This rule only applies to homes in Ontario as s. 28(1) of the FLA indicates.

 

What rights do I have to the Matrimonial Home?

Under the FLA s. 19(1) – both spouses have an equal right to possession of the matrimonial home, regardless of who is on title to the home (the owner).  This is a right not against the home itself, but against the other spouse.  This doesn’t mean that you have a right to take title to the home, but that you can enforce a right to live in the home through courts via an order for exclusive possession.

This remedy is provided under s. 24(1) of the FLA This is an extreme measure.  This is an order from the court saying one spouse has to leave their own home; a place where people build their lives and find security, which is a significant reason why the matrimonial home has its own section under the FLA.

  1. 24(3) of the FLA provides criteria the courts will consider when granting an order for exclusive possession:
  2. the best interest of the children affected;
  3. Any existing orders under Part 1 (family property) and any existing support orders;
  4. The financial position of both spouses;
  5. Any written agreement between the parties;
  6. The availability of other suitable and affordable accommodation; and
  7. Any violence committed by a spouse against the other spouse or the children.

You also have a say in how the matrimonial home is to be disposed of or encumbered under s. 21(1) of the FLA.  Even if you are not on title, your ex spouse cannot sell the home, transfer it, or refinance it without your consent.

You are also entitled to the value of the home and how that is distributed.  See our post on equalization to understand how the home and other assets are distributed on separation.

Patent vs. Latent Defects and Caveat Emptor

With multiple offers being common place in the real estate market, many buyers are being forced to submit firm offers on properties that they barely have seen and not had the opportunity to inspect. Some sellers are taking advantage of this opportunity and are offloading themselves of properties that have had defects and deficiencies.  Thus, it is important that buyers understand the maxim, “buyer beware” (or caveat emptor), applies when purchasing real estate.

I am often contacted by purchasers, after the fact, about a defect that only came to be discovered after closing. In such instances, it is important to understand what the law states about defects. Defects are regarded as being of two kinds, latent or patent.

Patent defects are those that can be discovered by a reasonable inspection and ordinary vigilance on the part of the purchaser. With respect to these kinds of defects, the ordinary rule is caveat emptor.

A vendor has no obligation to disclose a patent defect because a purchaser should have discovered the defect or deficiency, regardless of whether or not the purchaser had an inspection completed. However, if the vendor attempted to hide or conceal a patent defect then such action may be considered fraudulent and the purchaser may have a claim against the vendor, which they could pursue in the courts.

Latent defects are those which could not be discovered by a reasonable thorough inspection before completing the purchase. A vendor has a duty to disclose latent defects and if they fail to disclose such hidden defects they may be construed as misrepresenting the state of the property and such action may give rise to the purchaser having a claim against the vendor.

It is important to note that if a seller takes steps to make an inspection impossible, not including multiple offers, or misrepresents the condition of the property, if asked, the buyer will have a claim against the vendor which could be pursed in the courts.

However, if the buyer became aware of a latent or patent defect before closing and decided to complete the purchase, regardless, they will have lost their ability to pursue their claims in the courts.

CMHC Study – Examining Escalating House Prices in Large Canadian Metropolitan Centres.

CMHC, Canada Mortgage and Housing Corporation, just released a new study analyzing rising home prices in Canada, titled Examining Escalating House Prices in Large Canadian Metropolitan Centres.

CMHC posted about this report, stating “The report represents one of the most thorough examination of house price patterns ever completed in Canada and is the result of advanced, data-driven analyses and engagement with stakeholders and government partners.”

To review the document yourself, download it below:

Examining Escalating House Prices in Large Canadian Metropolitan Centres