Quitclaim Deeds in Ontario: What You Use Instead

You may have heard of a quitclaim deed, a short document used in some places to give up whatever interest you have in a piece of land. If you are adding a partner to a home, removing an ex-spouse, or clearing up an old family arrangement, you probably want to know whether you can do the same thing in Ontario.

In Ontario the job is done by a transfer document that is registered on title, not by a form you sign and keep. What it should say, and what tax and family law consequences follow, depend on your facts. This article explains the general picture so you can ask better questions.

Does Ontario have a quitclaim deed?

The term quitclaim deed is mostly used outside Ontario. In plain words it describes a document where someone passes on whatever interest they hold, without promising that the interest is good. How a change of ownership is handled in Ontario depends on the situation, so it is worth confirming with a lawyer.

Instead, ownership is recorded in the land registry, which is online only. Documents are registered electronically through Teraview by authorized account holders. Authorization to register is free to apply for, and applicants must provide 2 pieces of identification to guard against identity theft and real estate fraud.

Which document fits your situation depends on the facts, so it is worth asking a lawyer before you sign anything.

Which document does the job depends on what is happening

There is no single replacement for a quitclaim deed. The right step depends on why the interest is changing hands. The table below sets out some common situations and what the rules say.

Land transfer tax on transfers between family members

Many people assume a gift of land to a child or relative is tax-free. The Land Transfer Tax Act has no general exemption for gifts of land. If no consideration of any kind passes, though, no tax is payable because the tax is calculated on a nil value.

The big exception is a mortgage. When land is gifted subject to a mortgage the recipient takes on, land transfer tax is payable on the amount owing at registration, whatever the relationship between the parties. The Act also defines value of the consideration broadly, as the gross sale price plus any benefit of whatever kind conferred as part of the arrangement.

Spouses and former spouses have a separate exception. A transfer between them is exempt where the only consideration is assuming a registered mortgage, or where it is made under a written separation agreement or a court order. Land transfer tax on adding a family member other than a spouse depends on the facts, so confirm it before you sign.

Understating the price or giving false information to save tax is an offence, 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. The Act also contains a general anti-avoidance rule.

Family law and income tax issues

If the property is your matrimonial home, a spouse may not dispose of 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. A property that is not the matrimonial home may be treated differently where a joint designation of another property is registered and not cancelled. Note that these rules apply to married spouses, not common-law couples.

Income tax can also apply. 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. The person receiving a gift is deemed to acquire it at fair market value. Where both the transferor and the spouse or common-law partner are resident in Canada, a transfer of capital property to that spouse or partner is generally deemed to happen at cost, so no gain arises immediately, though the transferor can elect out. If the home was your principal residence, you must report the sale and designate the property to claim the exemption.

What to do next

• Write down who is giving up or receiving an interest, and why.
• Find out whether any mortgage stays on the property and who will be responsible for it.
• Check whether the property is a matrimonial home and whether a spouse must consent.
• Ask an accountant about capital gains and the principal residence designation.
• Speak with a lawyer before signing anything, since the tax rules can change and your facts matter.

Ontario has indicated that changes to the Land Transfer Tax Act have been proposed, so current rates and exemptions are worth confirming. For some transfers, such as adding a family member to title, the Ministry of Finance directs questions to LTTGeneral@Ontario.ca.

Frequently asked questions