Using a Power of Attorney to Sell or Transfer Property in Ontario

A parent can no longer manage their affairs, and the house needs to be sold, or a family member wants it moved into someone else's name. You hold a power of attorney, or you are about to rely on one, and you want to know how far it goes.

This article explains in general terms what a power of attorney for property allows when land is involved, where the limits are, and what usually has to be checked before anything is signed or registered.

What a continuing power of attorney for property allows

Under the Substitute Decisions Act, a continuing power of attorney for property may authorize the attorney to do anything with the grantor's property that the grantor could do, except make a will. Ontario guidance confirms this can include maintaining or selling the grantor's house.

That is a broad power, but it is not a licence to treat the property as your own. The attorney acts for the grantor, and the document itself may contain its own limits or conditions. Read it closely before you act.

Selling is different from gifting

Ontario guidance confirms that a continuing power of attorney for property can include selling the grantor's house. Whether a particular sale is appropriate depends on the document and the facts, so it is worth confirming with a lawyer. Giving the property away, or lending against it, is treated much more carefully.

The Act allows gifts or loans to the incapable person's friends or relatives only if there is reason to believe, from intentions the person expressed before losing capacity, that they would make them if capable. A fiduciary must also keep accounts of all property transactions. These gift and loan rules are written for guardians of property and are applied to attorneys under a continuing power of attorney through a further section of the Act, so the same discipline applies to you.

There is a further limit. A guardian of property must not dispose of property they know is the subject of a specific gift in the incapable person's will, subject to limited exceptions. If you know the house is promised to someone in the will, selling it is a serious step to discuss with a lawyer first.

Tax and matrimonial home issues to check first

Ontario's Land Transfer Tax Act has no general exemption for gifts of land. If no consideration of any kind passes, no tax is payable because the tax is calculated on a nil value. But if land is gifted subject to a mortgage the recipient takes on, tax is payable on the amount owing at registration, whatever the relationship between the parties. For a sale, the tax is normally calculated on the amount paid, including liabilities the buyer assumes.

Income tax is a separate question. A person who gifts property, or transfers it to a non-arm's-length person for less than fair market value, is deemed to have received proceeds equal to fair market value, which can trigger a capital gain when a home is gifted to a child. Transfers to a spouse or common-law partner who are both resident in Canada are generally deemed to happen at cost, though the transferor can elect out. If the home was the grantor's principal residence, the sale must be reported and the property designated on Schedule 3 to claim the principal residence exemption.

If the home is also a spouse's matrimonial home, no spouse may sell or mortgage an interest in it unless the other spouse joins in or consents, has released their rights in a separation agreement, or a court order authorizes it. A transaction that breaks this rule may be set aside. How this works when an attorney signs for one spouse depends on the facts and is worth confirming with a lawyer.

Registering the transaction

Documents are registered electronically through Teraview by authorized account holders. In practice, a lawyer usually handles this step. Ontario's land registration system does not accept powers of attorney that contain personal information such as government ID or bank account details. If your document includes that kind of detail, ask a lawyer how to deal with it before you try to register.

Be accurate about the price. Making false or deceptive statements, such as understating the price, is an offence under the Land Transfer Tax Act, with a fine of at least the greater of $1,000 or 50% of the tax that should have been paid, and possible imprisonment of up to two years.

What to do next

• Get a copy of the signed power of attorney and confirm it is a continuing power for property.
• Check it for conditions, limits or personal information.
• Find out how title is held and whether the home is a matrimonial home.
• Check the will, if you can see it, for any specific gift of the property.
• Start a written record of every property transaction you make.
• Speak with a lawyer, and an accountant about capital gains, before any gift or transfer.

Frequently asked questions