First-time Homebuyers and Ownership Rights

Spring is upon us and many couples are looking to buy their first home together. While taking your relationship to the next level is exciting, it’s important to know your rights when it comes to investing in a property with your spouse, fiancée or significant other.

Your rights and obligations are dependent on a number of factors, including your relationship status, whether you are listed on the title of the home, and the overall financial contributions you make towards family expenses.

Title is everything!
When it comes to homeowner rights, your title or claim of ownership on a home is important. If couples put down different amounts of money towards their down payment, they have to decide if a 50-50 title or a title reflective of their disproportionate contributions makes sense. If things don’t work out in the future, there are major differences when it comes to owning the home equally or in proportion to your respective contribution. Here are some of those differences outlined by relationship status:

Married couples
The Family Law Act (“FLA”) governs your financial marital issues if there is a relationship breakdown. Under this act, the matrimonial home is taken very seriously and there are several rights that are designed to protect the non-titled spouse. For example:

  • The owner cannot take on a mortgage without the consent of the non-owner; the consent of the non-owner is also required to sell the home.

  • If there is a separation, the home will be part of the common properties that will be divided as part of the overall equalization payment of all of their assets.

  • If there is a separation, the owner cannot force the non-owner to leave. They have to work it out or obtain a court order.

A word of caution for couples that are planning on living in a home they bought prior to getting married: The FLA does not provide a credit back to the owner for the pre-marriage value of the matrimonial home. This means that upon separation, the entire value of the matrimonial home (even if the down payment was invested before the marriage) will be divided equally unless you have a pre-nup agreement that says otherwise.

Common law couples
If you are living together but are not married, you are not subjected to the FLA. If there is a separation, the home will most likely be divided according to the proportion reflected in the title, rather than by how much each person invested into the property (via down payment or monthly payments).

It’s important to consider the arrangement of shared payments when it comes to common law couples. There are cases where one individual will make most or all of the mortgage payments and the other will pay for intangible expenses such as food and trips. The individual who makes payments towards the mortgage may be able to show that they contributed more towards the equity of the home, when in reality both contributed greatly to all of the family expenses.

This is a very complicated area of the law; we encourage you to speak to a family law lawyer before buying a home with someone.

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