Often times, while working with our clients, we come across couples who have recently decided to move in together. Be it by purchasing a new home jointly or by moving into an existing property one of them owns. When encountering these situations, we always try for our buyers to understand the complexities of these decisions, beyond the purely emotional and sentimental point of view.
Considering this to be a subject best addressed through a lawyer´s perspective and expertise, we invited Kate Grossi from Korman and Company, to discuss this with us over a light meal at Bonjour Brioche. Her valuable insight has helped us in putting this article together. To her, our sincere thanks.
When discussing the differences, on a Real Estate context, between couples who live in a Common Law relationship and those who are legally married, it is evident that there are significant aspects to consider.
In regards to home ownership, Common Law relationships may seem like a good idea, but may prove to be far from that for the spouse that holds no ownership rights on the property that the couple lives in. This is specially true when such rights are compared to the ones attained by legal marriages in Ontario.
Take for example The Ontario Family Law Act. A legal statute introduced in 1990, designed to protect the rights of spouses. One would guess that it would apply equally to both legally married couples and those under Common Law as well. But the truth is that it doesn´t.
Under the figure of a legal marriage, a home where both spouses reside on a permanent basis is considered to be a Matrimonial Home. The rights over this home are normally divided equally 50/50 amongst both spouses, regardless of who claims ownership or is ultimately on title. Any transactions related to this Real Estate property, must include the consent of the spouse, even if he or she is not on title. Nonetheless, if a prenupcial agreement has been set in place, exceptions may apply.
Under Common Law however, a home where both spouses reside on a permanent basis is not considered a Matrimonial Home. Upon a break down of such relationship, the person registered on title remains as the sole owner and can dispose of the Real Estate property without the spouse´s consent. Only in the event that the spouse has contributed financially to the asset or property, may they have a right to claim Constructive Trust and seek fair compensation for such. A Constructive Trust would normally be assigned by a court and would arise through any expenses or payments the spouse has incurred in. They may apply to mortgage and/or property taxes, expenses for property up keeping & repairs or by any other contributions made by the spouse towards the property´s expansion.
Although moving together with your significant other may not be a meticulously planned decision, it is important to know how to protect your rights and manage both parties expectations in the event that a Common Law relationship goes South.
Consider drafting a Cohabitation Agreement which will help outline exactly what happens if the couple separates. This can help address property rights, how to approach existing debt, and help avoid misunderstandings and unnecessary stress for the parties involved.
In the event that you plan to purchase a home jointly with your Common Law partner, consider taking title as tenants in common and assigning interest proportionate to the contributions being made by each party.
It is important to know that a couple is considered to be in a Common Law relationship after they have lived together continuously for at least three years. A couple may also be considered to be in a Common Law relationship if they have a child and are living together, regardless of how long they have lived together for.
If you are moving in with your partner or planning to engage in a Real Estate transaction with your significant other, be sure to seek the advice of a Real Estate lawyer, in regards to your particular situation and the things you should keep in mind.
Although in matters of the heart our actions aren't always rational, it's always best to understand what your options are.
This might keep you on the road to living happily ever.
Real Estate Sales Representative
647 995 5440
Jose & Claudia
RE/MAX agents since 2001, avid negotiators and passionate for what we do. Buying, selling or renting your home with us has never been easier!