Going on title to a property with a parent and it is your matrimonial home? How Section 26 (1) of the Family Law Act could impact you.

Real estate law and family law often intersect in very interesting and sometimes unwanted ways. Imagine a situation where your parents own their property, and you marry and live in the property, and you go on title to it as part of your estate planning. What would happen if you passed away before your parent? Recently, I came across this very situation with clients of mine.

Section 26(1) of the Family Law Act states that “if a spouse dies owning an interest in a matrimonial home as a joint tenant with a third person and not with the other spouse, the joint tenancy shall be deemed to have been severed immediately before the time of death”

This clause removes the typical “right of survivorship” between a parent and adult child that usually exists when they are joint tenants. Instead, they are treated as “tenants in common,” meaning the deceased’s interest in the matrimonial home does not automatically transfer to the surviving parent.

As a result, the surviving parent will retain their own interest in the home, but the deceased’s share will go to their estate. It will be handled according to their Will or relevant estate laws. In many cases, the deceased’s portion of the home will pass to their spouse, rather than returning to the parent who funded the purchase. The parent would lose their portion of the house to the spouse who did not put any funds towards the purchase.

It is very important to consult with a lawyer before you add yourself to the title of any property. There can be consequences that you may not realize.