The first dealings exemption came up with a client recently who had owned their home in Etobicoke since 1972. When I asked whether they had any plans to move, they looked at me like I’d suggested something criminal. You’ll have to drag me out by the legs with my fingernails scraping the floors, they said.

For an estate planner, this can be the best answer a client gives you.

They’d never heard of the first dealings exemption. Most people haven’t. But they were the ideal candidate, and once I ran through what it could mean for their estate, they were thrilled someone had asked the question.

Attention Financial Advisors and Real Estate Agents

This post is aimed at two groups. If you’re an Ontario homeowner who bought before 1990 and has no intention of moving, keep reading. If you’re a real estate agent or a financial advisor, this is the kind of thing worth knowing for your longest-tenured clients.

What Probate Actually Costs Ontario Families

When someone dies in Ontario, their executor usually has to apply to the court for a Certificate of Appointment of Estate Trustee. Most people call this probate. Probate triggers Estate Administration Tax: $0 on the first $50,000 of estate value, then $15 for every $1,000 above that.

On a $1,000,000 home, that’s $14,250 in tax. On a $2,000,000 home, it’s over $29,000. And that’s before you count the legal fees, the paperwork, and the waiting.

The waiting is the part people don’t always think about. Getting a Certificate of Appointment in Ontario can take six months to a year. Until that certificate is issued, the estate can’t sell the property, can’t transfer it, can’t do much of anything with it. The family waits while the process grinds along.

How the First Dealings Exemption Works in Ontario

Ontario has two land registration systems: the old Registry system and the more modern Land Titles system. Starting in the late 1980s and early 1990s, Ontario converted millions of properties from Registry into Land Titles. Properties that were converted, rather than originally registered in Land Titles, are flagged on title as Land Titles Conversion Qualified, or LTCQ.

Under the old Registry system, property could pass on death without requiring a Certificate of Appointment (otherwise known as probate). When Ontario converted those properties to Land Titles, it did so without the owners’ knowledge or consent. Stripping them of a right they already had, simply because the province made an administrative decision they had no part in, would have been unfair. So the law preserved it. The first transfer after conversion is treated as if the property were still in Registry, which means the executor can, under the right circumstances, transfer it directly to the beneficiaries without probate and without paying Estate Administration Tax on its value. That first transfer is the first dealing the exemption is named after.

Checklist That Determines Whether a Home Qualifies

This is where a lawyer needs to pull the title and look carefully. But here are the questions that flag eligibility at the outset.

Is the property in Ontario? This exemption only applies here. A Quebec cottage or a Florida condo is out.

Is the title registered as LTCQ? Properties first registered in Land Titles, including most newer condominiums and subdivisions, are Land Titles Absolute. They did not originate in Registry, so they don’t qualify.

Has there been any transfer registered on title since the LTCQ conversion? Adding a name, removing a name, any ownership change may nullify the exemption. This is where a lot of otherwise eligible properties fall out, and it’s not always obvious from the deed.

The client who bought their home in 1972, has lived there ever since, and has never touched title? That was definitely one worth flagging.

Qualifying Is Only Half the Equation

Here’s what people miss even when they’ve heard of the exemption. Qualifying is one thing. Capturing the savings is another.

If the estate has other assets that require probate, you need multiple-will planning: a secondary will that keeps the property outside the probate application entirely. Without that structure in place, the exemption can be lost even on a qualifying property. This is why it has to be addressed during estate planning, when there’s still time to set it up properly, not after the fact when the executor is already in the process.

What Real Estate Agents and Financial Advisors Should Know

The clients who qualify for this are ones you already know. They bought their homes before 1990. They have never moved, have no intention of ever moving, and have never changed anything on title. And they almost certainly have no idea this exists.

If you have clients who fit that description, it is worth asking whether they’ve had a lawyer review the title for this. The savings are real. On a typical GTA home it often starts from $14,000 in estate tax alone. When you add the time, the additional legal fees, and the months the family has to wait before they can do anything with the property, the case for checking this gets compelling quickly.

I’ve had several files recently where we caught the eligibility during estate planning, structured the wills properly, and when the time came the estate avoided the probate application on the property entirely and saved more than $30,000 in Estate Administration Tax. The family got control of the house months earlier than they would have otherwise. They were, to put it plainly, over the moon. It’s one of the more satisfying files to see through to the end.

Our info sheet on the first dealings exemption walks through the five-box test in plain English. Download it here. Pass it along to any client who might qualify. And if you want to talk through a specific situation, reach out directly at of****@**dg.ca or 416-620-0362.

Richard Levitt is the owner and managing lawyer of Levitt Lightman Dewar & Graham in Etobicoke. This post is general information only and does not constitute legal advice.