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Common Law Issues The law regarding common law relationships is different than in cases of divorce. Discuss the issues that affect unmarried couples here.

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  #11 (permalink)  
Old 10-04-2016, 05:13 PM
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I think that the down payment is excluded from equalization, so what you and your ex divide is the value of the house minus the down payment of $200K you provided (assuming you have a paper trail that shows that all the down payment money came from your personal funds and went straight into the purchase of the house). This is possible only because you were not legally married and so the house is not subject to the completely equal division that a marital home would be subject to.

The argument I have heard for this is that if the down payment were not excluded, you would be in effect making a gift of $100K (half the down payment) to your ex. But you do not intend and never did intend to make such a gift - you never gave her $100K, you invested it in the house purchase. Your ex would be unjustly enriched if this amount were treated as a gift.
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Old 10-04-2016, 05:14 PM
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It's common law, so there is no exclusion or date of marriage deductions. There's no equalization.
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Old 10-04-2016, 05:20 PM
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You're right, "equalization" is the wrong word. I should have said "division of property" (splitting the value of everything that is in both partners' names). I think you can make the case that the down payment which came from only one person would be excluded when the value of the house to be split is calculated.
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Old 10-04-2016, 06:04 PM
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Quote:
we generally leave with what we brought.
If you are cohabiting with someone, and not married, then there is no division of property. It therefore is not a matter of leaving with what you brought in but leaving with what you have now.

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the house is worth $450k...with a $100k mortgage +line of credit $50k
Therefore, the presumption is that the jointly owned house with 450k - 100k - 50k = 300k equity is 150k in equity for each owner.

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What happens to the downpayment?
As the person making the down payment, the onus is on you to show that you should receive funds back. Factors that come in:
- How much was the down payment
- How much did the house increase in value
- Was any work done on the house
- Costs

One of the problems with looking at "down payment first" - getting your money back, then dealing with sharing - is that all costs reduce the shared money while you have a protected investment. This may not be fair or right, depending on how the mortgage was paid and any work done on the home.

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provided they entered a joint tenancy arrangement, she legally owns 50%. That will only change if a judge determines otherwise. He can argue for a constructive trust, but there is no guarantee that he will be successful.
Well said.

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It's common law, so there is no exclusion or date of marriage deductions. There's no equalization.
An important point: the fact that the parties happened to be in a relationship is not terribly relevant.

Two friends buy a house together; one puts down $200k, the other puts down $10k. They split the mortgage for ten years. How does this impact the division of net proceeds of sale when they sell it?
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Old 10-05-2016, 02:37 PM
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Originally Posted by Kinso View Post
Of course you are correct, he will need to demonstrate the constructive trust exists, but he has a strong argument.
I disagree. I can see how one would come to that conclusion using logic; however, I don't believe the family court is in the business of taking money from the lower income earner and giving it to the higher income earner. However, like anything, there are exceptions. In my opinion, he's up shit creek without a paddle.

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Originally Posted by OrleansLawyer View Post
An important point: the fact that the parties happened to be in a relationship is not terribly relevant.
Agreed.

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Originally Posted by OrleansLawyer View Post
Two friends buy a house together; one puts down $200k, the other puts down $10k. They split the mortgage for ten years. How does this impact the division of net proceeds of sale when they sell it?
It depends on the type of ownership they entered with each other (as previously discussed).
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  #16 (permalink)  
Old 10-05-2016, 06:03 PM
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I wish we could bet on this. Would be a lot of fun.
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