Common Law Property Division

[maggie99]

My partner and I took possession of a home in April 2014, and moved in together at that time. Both of our names are on title and on the mortgage. When we purchased the home I put a considerably larger down payment then what she contributed. If our relationship were to end and we were to sell the home, how is the asset divided? Do we first receive or respective down payments, and then divide the remaining net proceeds equally?

[stripes]

It depends on where you are. In Alberta, this is what would happen:

"Property Rights for Common-law Couples
General

The general rule is that when common-law couples separate, each party keeps the property bought during the relationship that they paid for or that is registered in their name. Unlike the Matrimonial Property Act, there is no presumption of equal division of property. There are a few important exceptions to this rule:

1) Land held in joint names

Where parties have bought property together and both parties are registered in title, both parties are legal owners. One party cannot sell the property without the consent of the other." (Edmonton Alberta Legal Information About Common Law Relationships)

So my understanding is that when you separate, you each get back your down payment, and you divide any remaining equity between you. Whether this means you sell the house or one person buys out the other person's interest, I believe you are each entitled to the value of your initial down payment plus half the increase (or decrease) in the value of the property between the time you bought it and now. Fortunately, since you only bought it two years ago, there shouldn't be a lot of equity and you should both be able to walk away more or less in the same state as when you bought it.

Of course, I am not a lawyer, etc.

[maggie99]

Thanks for your response. I am in Ontario, and my assumption is that the division of property would be treated in the same fashion as you outlined above (in Alberta). Can anyone confirm?

[arabian]

No Alberta has distinctly different matrimonial property laws as well as the Dower Act (I believe Ontario has a similar law but not identical).

I'd advise consulting with a lawyer.

something to ponder:

http://estatelawcanada.blogspot.ca/2...our-plans.html

http://www.duhaime.org/LegalDictionary/D/Dower.aspx

Often a "waiver of dower rights" has to be executed before transfer of property for sale.

[standing on the sidelines]

its always best to get something written up and signed to reflect what you want.

Later on you could get married and divorced and you want to protect yourself. I know my lawyer mentioned it to me. She said if I was going to let someone move in with me then to come in and get and agreement done to protect my larger investment in my home.