Keep it all in the family by selling real estate to a family member.
Picture how good it could be: selling real estate to a family member cuts out the middleman. You won’t have to list your home for sale, deal with those bothersome weekend open houses (!), or take the dog for a car ride while strangers roam through your home.
Now that was easy.
Congratulations! What comes next is the legal part.
How to Sell Your Home to a Family Member
More good news — if the price is right, selling real estate to a family member makes hiring a real estate agent optional. Provided you agree on terms and conditions of the sale, an Axess Law real estate lawyer can draft the agreement of purchase and sale. That could save you the standard 5% realtor commission.
Hold on, selling real estate to a family member isn’t always smooth sailing. You may need a realtor after all, and hiring one can give you a neutral, third party mediator to navigate the tricky parts of the agreement. They may even agree to a flat fee because the hard part, finding a buyer, is done.
What’s in the agreement of purchase and sale in Ontario.
Think of it this way. Your home is precious to you. Letting it go can take some finangling. Let’s take an example.
Deciding Fair Market Value
The first decision when you sell your home to a family member is determining the fair market value, or the price your home would normally sell for. Ask any realtor for a comparative market analysis (it’s free).
Hiring a home appraiser puts you one step ahead of the bank when a family member needs a mortgage. Most lenders will only approve a mortgage if the home price is at or near fair market value.
Selling for less has tax consequences. Regardless of what price you settle on, capital assets transferred to family members are deemed to be sold at fair market value for tax purposes.
If your spouse dies, who gets the house?
Canada Revenue Agency bases capital gains calculations for secondary residences on 50% of the difference between what you paid for your home, and its sales price. For instance, if you bought for $500,000 and sold for fair market value of $1.1 million, your capital gain is $300,000 (50% of $600,000).
Before you agree on a price, check if your home qualifies for the principal residence tax-free exemption. Ask a tax lawyer or accountant for advice if it doesn’t.
Including the Home Inspection Clause in Ontario
You know your home is in top condition, but your sibling or second cousin wants a professional home inspection. After all, buying is an investment, and a risk. You agree, but now the inspector is being awfully intrusive, asking to look up in the attic for bats, or move the furniture to check the wallboard for cracks.
Before you get testy about every imperfection, a formal agreement of purchase and sale can save the day. It sets out how long a family member has to inspect your home, and what your liabilities are for patent, visibly obvious defects. That could prevent misunderstandings about whether your buyer can expect to renegotiate the price or ask for repairs if the inspection is not entirely to their satisfaction.
Drafting the APS when selling real estate to a family member.
Paying Closing Costs
Selling to anyone, including a family member, incurs closing costs like provincial, and (in Toronto) municipal land transfer taxes, outstanding property taxes and utility costs, title transfer charges, and legal fees and disbursements. Agree on who will pay these before you sell.
Joint tenants vs tenants in common titles — what works best for family.
Why You Need a Real Estate Lawyer
Selling real estate to a family member can be as simple as transferring your home or land. Axess Law takes care of searching title to a property for financial claims or construction liens, then registers it to the new owner.
What adding spouses to house title in Ontario costs.
More complicated property transfers may require a formal agreement of purchase and sale. Axess Law’s licensed real estate lawyers review the draft or signed agreement to ensure the terms and conditions are advantageous to you. We advise you on adding clauses that could protect your legal interests, like insisting on a professional home inspection.
How to transfer property title to a family member in Ontario.
When the offer to purchase meets your satisfaction, your Axess Law real estate lawyer liaises with your family member’s lawyer and mortgage lender to finalize the sale and transfer the property title.
Mortgage financing can take longer than buyers expected. Axess Law amends the agreement of purchase and sale to push back closing dates when needed. When a new mortgage is approved, we discharge existing loans and prepare the legal documents you need to sign to make the sale complete.
Questions you ask on selling real estate to a family member or anyone.
Secure Real Property in Your Will
Now is a good time to update your personal Will. Making a new Will doesn’t have to be expensive or time consuming when you use Axess Law. We can draft a last Will and testament for you, or mirror Wills for you and your spouse or common law partner. Axess Law gives you a discount when you share an appointment with your spouse. Read about your spouse’s right of survivorship in Ontario.
Close Real Estate Transactions Remotely
If you’ve never used a virtual real estate lawyer before, it makes selling real estate to a family member remotely a breeze. Use any home computer, laptop, tablet, or compatible mobile device to connect with your lawyer. Our secure, confidential remote conferencing software protects your privacy while allowing you to sign legal documents online. Ask us about our virtual real estate lawyer services today.
How video closings for real estate transactions work.
Affordable Real Estate Lawyers, Anywhere You Are
Access lawyers for less in Greater Toronto Area, Ottawa, or anywhere in Ontario when you buy, sell, or transfer property. Axess Law’s flat fee real estate lawyers are affordable, and our rates are all inclusive (excluding taxes, disbursements, and third-party charges). Axess Law offers you only the legal services you absolutely need. Your final invoice includes no surprises or hidden charges. Your itemized statement of adjustments is explained when we deliver it, and we answer any questions you have about it.
Hire a real estate lawyer anywhere in Ontario.
Make Phone or Online Appointments
Call our 647-479-0118 lawyer line (toll free to 1-877-402-4207) for a free quote, or use our easy online booking form. Drop by any Axess Law Greater Toronto Area or our Ottawa law office to make day or evening appointments in person. We have onsite parking, and major transit access.