When Only ONE Person Pays The Mortgage – Slicing The Nest Egg

The relationships we choose can have ramifications for our home ownership.
Our friend Helen Morris wrote a great article for the National Post this week that we’d like to share with you.  It features some great advice from lawyers, financial planners, and other experts.

Who Pays The Mortgage?“If you are living as a couple but because of circumstance only one of you pays the mortgage, the rules are all over the map as to whether you have the same rights as a married couple upon separation,” says Christine van Cauwenberghe, an estate-
planning specialist with Investors Group.

Regardless of who pays the mortgage, it is important to get legal advice on how to set up the ownership or title of your home.

“We tell clients entering into common-law relationships to enter into some sort of cohabitation agreement… as to how the assets are going to be shared”.

“Generally, title to the property is what determines who is the owner, not who pays,” says Ray Leclair, real estate lawyer and vice-president of Title Plus at Law Pro in Toronto. “It is very dependent upon the individual facts,” he adds. That is true whether you are married or in a common-law relationship, and no matter how property ownership is set up.

“When you buy a property… you can put it as joint tenants or tenants in common,” Mr. Leclair says. “Joint Tenancy is the common way for married couples who will be taking title. They are equal owners of the property and the survivor is automatically the owner.”

If the title is registered as tenants in common, unless otherwise stated, a couple is presumed to have an equal share of the property, Mr Leclair says. However, he cautions, there have been successful claims on property based upon constructive trust and unjust enrichment.

“The constructive trust [case] was where the common-law spouse… was in a relationship for 25 years. They split up. He was the [sole] title owner. She didn’t accept that, so she went to court and established that she had a constructive trust that he held the property in trust for both of them,” Mr. Leclair says. “The unjust enrichment [case] is where two people get together, one owns but the other puts a lot of money into renovations. It would be unjust to let [only the title owner profit from the proceeds of the sale of the home].”

Mr. Leclair says marriage affects the status of the home.
“Married spouses have equal right to possession,” Mr. Leclair says. “There’s a restriction upon the title ‘spouse’… transferring, mortgaging, doing anything with the property without the written consent of the other spouse.”

Ms. Cauwenberghe says cohabitation agreements can be useful for dividing property up to a point.

“In the courts once you’ve entered into a ‘family joint venture’… raising children together, one person is moving so the other person can take a job… we’re going to get closer to the 50-50 division no matter who is making the payments,” Ms. Cauwenberghe says. “You’re making decisions as a couple.”

If you would like more information about Buying or Selling a home that you’ve shared with your significant other, give us a call.  We can talk to you about various rights and the processes to make a smooth transition.

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