Today, we focus on a situation we see more and more often in Ontario:
Parents helping children purchase real estate.
What seems like a simple and generous arrangement can carry significant legal and financial consequences.
Here are three things every family should understand.
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Being on title for mortgage purposes can create real ownership and tax consequences
Parents are often added to title to help a child qualify for financing.
From a lender’s perspective, this may solve a qualification issue.
But legally and financially, being on title is not just a formality.
It may:
• give the parent a registered ownership interest
• expose the property to the parent’s creditors
• create tax and estate implications
• reduce or eliminate first-time homebuyer benefits
For example:
If a parent who is not a first-time homebuyer is added to title with a 50% interest, the available Ontario land transfer tax rebate for first-time buyers (up to $8,475) may be reduced proportionately — potentially cutting the benefit in half.
Even where the intention is “just to help,” the consequences can be significant.
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The law may presume the parent did not intend a gift
Where a parent contributes funds toward a property, or is placed on title, the law may apply what is known as a resulting trust.
In simple terms:
There may be a presumption that the parent did not intend to gift the funds or their interest — unless there is clear evidence to the contrary.
The Supreme Court of Canada addressed this in Pecore v. Pecore, a leading case in this area.
This means that, in a dispute, the outcome may depend heavily on how well the original intention was documented.
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Separation can pull parents into unexpected disputes
One of the most overlooked risks arises when the child later separates from a spouse or partner.
At that point:
• the ownership structure may be scrutinized
• the parent’s interest may be questioned
• the property may become part of broader family litigation
What was intended as a simple arrangement can become legally complex — and, in some cases, contentious.
Dig deeper
Supreme Court of Canada — Pecore v. Pecore, 2007 SCC 17
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Ontario Government — Land Transfer Tax Refund for First-Time Homebuyers
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Ontario Government — Family property overview
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Bottom line
Helping a child purchase a home is common — but it should never be treated as a purely informal arrangement.
Title, contributions, tax implications, and intentions all matter.
Without proper structuring and documentation, families can face unintended legal and financial consequences later.
As always, we are happy to assist in structuring these arrangements to reflect your intentions and protect all parties involved.