On February 6, 2025, Jordan Atin was joined by Michele Allinotte for an eState Academy Webinar hosted by eState Planner to discuss real estate conveyancing after death. This blog summarizes some key takeaways from their discussion, which focused on property transmission, the First Dealings Exemption, and probate tax considerations.
Automatic Vesting and Its Limitations
The concept of automatic vesting pursuant to s. 9 of the Estates Administration Act.can be complex. Legislation does not explicitly state that automatic vesting applies when someone dies intestate, but this provision of the Act may apply if property is not transferred within 3 years of death on an intestacy and no caution is registered. Further, a will can and often does override automatic vesting. Specifically, if an executor has the power to sell or postpone the sale of property, that property may not automatically vest. This exception is particularly relevant when dealing with a specific bequest of property, where the will explicitly excludes the power to sell that property.
In practice, many wills include a power to sell or postpone conversion. As such, lawyers reviewing estate matters must carefully examine the will to determine whether automatic vesting applies. In rare cases, such as with holograph wills, where no express or implied power to sell is granted, automatic vesting may become relevant. However, if there are debts in the estate, the property may still be subject to claims before vesting can occur.
For more information on automatic vesting, see our blog: After Death: Does Property Automatically Vest After Three Years?
The Necessity of Probate in Property Transfers
Once it is established that a property has not automatically vested due to timing and the executor’s power to sell, the next question is whether probate is necessary for the transfer of the property. This largely depends on whether the property qualifies under the First Dealings Exemption.
If a property qualifies for the First Dealings Exemption, a certificate of appointment of estate trustee (i.e., probate) is not required to transfer the land. However, probate may still be required for other aspects of the estate. If the exemption does not apply, a certificate of appointment is necessary to transfer the land.
Understanding the First Dealings Exemption
For a property to qualify under the First Dealings Exemption, several conditions must be met, including:
- The individual must have acquired the land when it was registered under the registry system.
- The land must have been converted from the registry system to the land titles system during the individual’s ownership.
- The property must be classified as Land Titles Conversion Qualified (LTCQ).
- There must have been no disqualifying dealings with the land between the time the owner purchased it and their death.
The term “First Dealings” refers to the fact that there must not have been any prior transactions that would disqualify the exemption. Some common transactions that do not disqualify the exemption include a survivorship application where spouses originally acquired the property in the registry system, and one spouse later gains full ownership by right of survivorship.
However, certain transactions may disqualify the exemption, such as a transfer from one spouse to another after the property was converted from registry to land titles or a change in tenure, such as converting sole ownership into joint ownership with another party (e.g., adding a spouse to the title post-conversion). Conversely, changes between joint tenants and tenants in common may not disqualify the exemption, as they do not alter the fundamental ownership structure.
For more details, see the Teraview Supplement on First Dealings.
Conducting a Title Search
To determine whether a property qualifies for the First Dealings Exemption, a title search is necessary. Key aspects to review include:
- LTCQ status of the property.
- Deceased owner’s name on title and their registered ownership capacity.
- Date of conversion from registry to land titles, which indicates when the property ceased being governed by the registry system.
- PIN creation date, which usually corresponds to the date of conversion.
If the deceased owner acquired the property before conversion and there have been no disqualifying dealings since, then the property may qualifies under the First Dealings Exemption.
Probate Tax Considerations and the Role of Multiple Wills
If a deceased individual has only one will, the real property’s value must be included in any probate application that may be commenced, whether or not the First Dealings Exemption applies.
To mitigate probate taxes, estate planning often involves using multiple wills. A secondary will can govern real property subject to the First Dealings Exemption, along with other personal assets such as vehicles, tools, and personal belongings. However, if only one will exists and probate is necessary, the rule is straightforward: If the will governs an asset, that asset must be included in the probate application and taxed accordingly.
Conclusion
Understanding the nuances of property transmission and the First Dealings Exemption is critical in estate administration. While the first dealings exemption can expedite property transfers, it does not eliminate probate tax obligations if the governing will is later probated. Proper estate planning—including title searches, the use of multiple wills, and strategic probate timing—can ensure a smooth transition while minimizing tax liabilities. To register for future webinars, visit eState Academy Webinars. Many thanks to Jordan Atin and Michele Allinotte for a fantastic presentation!
Thanks for reading,