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Who Goes on an Ontario Mortgage if You Are Common-Law?

You’re in love, and want to buy a home together! Fantastic! Buying a home together is a wonderful thing and typically, not so complicated – for those that are already married. But what if you’re not married, but are considered common-law? In Ontario, you are considered common-law partners if you have lived together with someone for three or more years. But many people think that being common-law, or “unmarried spouses” grants you the same rights as married couples. In fact, that’s not true. At least not in the case of a mortgage.

“Many people don’t realize that unmarried spouses don’t automatically have the same property rights – for them, it can be an uphill battle to get back what they’ve contributed,” says Jennifer Krob, a Toronto family lawyer with Heydey Green PC.

Common-law spouses have two options when it comes to a mortgage: they can go on the title together, or one person can own the home while the other one simply resides there. Purchasing a home together means that you can do so as joint tenants, or tenants-in-common.

Buying a home together as joint tenants means that both people each own half of the home, and everything inside of it; this is non-negotiable in a joint tenancy agreement. If one person in the couple passes away during home ownership, their share of the home will automatically be given to the surviving owner.

Tenants-in-common works a bit differently, as their are options here. With a tenants-in-common agreement, the couple must decide whether ownership will work the same way as it does in joint tenancy, or whether they will agree on one partner owning a greater share of the home than the other. When this is the case, if one partner passes away (no matter which partner or how much of the home they share,) they can pass their portion of the home onto whomever they choose.

This all wraps up common-law Ontario mortgages in a nice, neat little package, but what about if only one person owns the home, while the other simply lives there? In this case, typically the actual homeowner would be legally entitled to the home. But what about all the work the other spouse put into the home? Into repairing it, fixing it, and making it look nice? Or all the furniture they purchased? To protect both partners in cases like these, a cohabitation agreement may be in order.

A cohabitation agreement is just that – a document stating that two people will cohabit together, and that will each have rights and responsibilities to different things. The agreement can cover many things, including “sweat equity” ownership, and all that furniture you brought in and paid for yourself; as well as things such as property taxes, and HELOCs taken out on the home.

“You really need to look at the long-term picture when going through this process,” says Realtor Lauren Haw, who purchased a place with her boyfriend, who’s not on the contract. The two of them signed a cohabitation agreement.

“Conversations like this are about your relationship,” she continues. “But it’s also about the numbers. You can’t be filled with woo and romance, letting your emotions get the best of you. You really need to make a realistic business decision, and put on your ration, decision-making minds.”

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