|Transfer of property
I often get asked about the process involved in removing someone from the title to a property. It’s a simple question but the answer would depend upon the circumstances.
Let’s consider the following three scenarios:
- Scenario #1 – Tatay, Nanay and two adult children purchase property together
- Scenario #2 – Newlyweds purchase property together with bride’s mother
- Scenario #3 – Two siblings purchase property together
In Scenario #1, the family purchased the property while both adult children were still single. What happens if the panganay gets married and plans to buy a new house with his wife? If the panganay decides to live in this house with his new wife, she would obtain certain legal rights to the property even though she is not on the title. Why? Because of what is called “homesteads rights.” A Homestead right is the right of a spouse to live in the marital home even if he or she is not on the title. In order to avoid any complications with homesteads rights, it may be wise to remove the panganay from the title of the family property prior to the wedding if everyone knows they are moving out anyway. However, once that decision has been made, if there is still a mortgage on the property, you will need to get the bank’s approval before any transfer can be done. I will explain this further under Scenario #2.
In Scenario #2, the newlyweds did not qualify for a mortgage without the assistance of the bride’s mother. The bank said that they would only give them a mortgage if the bride’s mother was on the title and the mortgage. Thus, all three were registered as the owners of the property. A few years later, the newlyweds now want to remove the bride’s mother from the title. Their first step is to ask the bride’s mother if she will agree to be removed. If the bride’s mother does not agree, there is nothing that can be done because she is an equal owner to the property, and without her signature on the documents, no transfer can take place. If the bride’s mother agrees to be removed from the title, the couple must now approach their bank to see if they will be qualified to continue the mortgage without the bride’s mother on the application. If the bank approves, then a transfer can be completed removing the bride’s mother from the title and a new mortgage for just the couple can be registered.
This also applies to our Scenario #1. Let’s assume the family went to their bank and asked if they could qualify for a new mortgage without the panganay. If the bank said yes, then they could do the transfer and register the new mortgage and the panganay could buy a new house with his wife. However, if the bank said no because the family does not qualify without the panganay on the title, then the family has to make some decisions. Do they keep the panganay on the title and hope that he can also qualify for a new house with his wife even if his share of the mortgage on the family house is still considered his debt? Or, do they decide that the panganay should move into the family home with his new bride until they can qualify without him? Or do the newlyweds move into an apartment until they can remove his name from the title of the family home? These are hard choices that the family could face if the bank says no.
In Scenario #3, two siblings bought property together. After many years, the mortgage has been paid off and one sibling decides he wants to sell his share. Because there is no mortgage on the title, the siblings have what is called “clear title.” Therefore, the siblings do not need the permission of the bank to do the transfer. As long as the two of them can agree on the terms of the buy-out, the property can be transferred.
There are many situations that can arise when it comes to ownership of property. There are many different rights involved depending on who is on title and who lives on the property. There is also the added dimension of how the property is held. In other words, is the property owned by “joint tenants” or “tenants in common.” I will return to these two concepts in a separate article.
If you or your family are thinking of transferring your property, don’t just sign papers without fully understanding your rights and what it is you are signing. Don’t assume that your transfer will be the same as your friend’s or your ninong’s pamangkin. Don’t just rely on “sabi nila.” Take the time to get proper legal advice. Otherwise, you might end up giving away your house without even knowing it.
The content of this article is not intended as legal advice and is for information purposes only. Should you require legal advice on a specific issue relating to the contents of this article, please seek the services of a legal professional.
Alona C. Mercado is a lawyer practising in Winnipeg with the law firm of MONK GOODWIN LLP. She was called to the Manitoba Bar in 1999 and the Ontario Bar in 2003. Her preferred areas of practice include wills and estates, committees, real estate, and immigration law. Alona can be reached at (204) 956-1060 ext. 233 or firstname.lastname@example.org.