Mortgage rates across Canada have been near historic lows for quite some time. As a result, many Canadians have chosen to forego renting, and become homeowners. However, this sometimes means buying a home with a partner regardless of marital status.
According to the latest census data from 2011, the number of common law couples in Canada increased by 13.9 percent from 2006. Common law relationships have become statistically more popular than traditional marriage over the last decade. However, what many common law families fail to realize is that property rights are different for common law than for marriage.
Family law lawyer Jennifer Krob with Heyday Green PC offers advice on how common law couples should purchase a home. She says there are distinct differences between purchasing as joint tenants or tenants-in-common. Joint tenancy means both buyers have equal claim to the house regardless of death, damages, or the status of the relationship. Tenants-in-common provides options for one partner to legally own a greater share of the house, and dictate how it will be passed on in inheritance.
To protect your legal rights to the property, Krob recommends partners sign a cohabitation agreement. This is a legal document that outlines what you and your partner have decided the arrangements should be if the relationship doesn’t work out, including who has to move out and who will be responsible for the mortgage, a home equity line of credit, or any other outstanding debts. Krob says it is best to do this before committing to the purchase.
“It's great to do this when the relationship is strong, because creating solutions is easiest when a couple is still working together as a team.”
In addition to financial security, Krob says a cohabitation agreement is a great way for common law couples to plan out their future together. “It's not always about the property, but about finding a way to discuss starting a life together.”