Selling a Deceased Parent's House in Ontario: Step by Step

Your parent has died and the family home now has to be dealt with. It is tempting to start cleaning it out or call a real estate agent right away, but the order of steps matters.

This article walks through the usual sequence in Ontario, from getting authority to distributing the proceeds. Every estate is different, so use it as a map and confirm the details with a lawyer.

Step 1: Establish who has authority

In Ontario, only an estate trustee has legal authority to manage or distribute an estate, which includes selling the home or clearing it out. A deceased person's property, including the home and its contents, vests in the personal representative, who holds it as trustee.

For many estates that means obtaining a certificate of appointment. Estates valued at $150,000 or less can use the small estate process with Form 74.1A, Application for a Small Estate Certificate. Until authority is in place, avoid listing the house or removing contents.

Step 2: Protect the house while you wait

An empty house is a risk. Statutory Condition 4 says a change material to the risk that is within the insured's control and knowledge voids the contract as to the part affected unless promptly notified in writing to the insurer or its agent, and a house left vacant after a death can be such a change. Once notified, the insurer may cancel, or may require an additional premium to be paid within fifteen days.

Vacancy limits are policy-specific, so read the policy wording and notify the insurer in writing. The insurer may end the contract on 15 days' notice by registered mail, or on five days' written notice delivered personally. Do not let coverage lapse without a replacement.

Step 3: Check for people with rights in the home

• A surviving spouse who has no interest in the matrimonial home but lives in it may stay in possession against the estate, rent free, for sixty days after the death.
• A dependant may apply for support, which can include possession or use of the home.
• If a minor has an interest, no sale or conveyance under the Estates Administration Act is valid without the written approval of the Children's Lawyer or, failing that, a judge's order.

If the sale is made only for the purpose of distribution, it is not valid without the required concurrence, which generally means a majority of the beneficiaries holding at least half the interests. Real property not disposed of within three years after death vests in the beneficiaries, unless the personal representative has registered a caution, which holds that off for another three years.

Step 4: Deal with the mortgage, taxes and sale

Where the land is mortgaged, the beneficiary who receives the home takes it subject to the mortgage unless the will or another document shows a contrary intention. A general direction in the will to pay debts is not enough by itself to shift the mortgage off the home.

For certificate applications made on or after January 1, 2020, there is no Estate Administration Tax on estates valued at $50,000 or less. Above $50,000, the tax is $15 for every $1,000 of estate value (or part of $1,000), with the value rounded up to the nearest thousand. Ontario real estate is valued less encumbrances such as a mortgage, but lines of credit, credit cards, funeral expenses and lawyer's fees cannot be deducted. An Estate Information Return is due within 180 calendar days after the certificate is issued.

On the transfer, the estate trustee must state that they are entitled to transfer under the will, the Estates Administration Act and the Succession Law Reform Act, or that a court authorized it. The transfer must also say whether title is subject to spousal rights and that required consents were obtained or none are required. The sale itself also has income tax consequences, covered in our article on capital gains on inherited homes.

Step 5: Pay debts and distribute carefully

The residuary estate pays the deceased's debts rateably according to value, subject to a contrary intention in the will. A personal representative who advertises for creditors' claims and then distributes is not liable to a creditor whose claim they had no notice of.

Where there is no will, no distribution may be made until one year after the death, subject to s. 53 of the Trustee Act. Before distributing sale proceeds, request a CRA clearance certificate on Form TX19. A legal representative who distributes without one can be personally liable for unpaid tax, up to the value of the assets distributed. A trustee is entitled to a fair and reasonable allowance for care, pains and trouble, as allowed by a judge.

What to do next

• Confirm who the estate trustee is and whether a certificate is needed.
• Notify the home insurer in writing and read the policy.
• Gather the will, title documents and mortgage statements.
• Check for a spouse, a dependant or a minor beneficiary.
• Speak to a lawyer and an accountant before listing the house.

Frequently asked questions