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5 things you should know when you buy a house as a couple

Married or common law, the implications are different when buying a house together.

By Fonds de solidarité FTQ

So you’ve just found the perfect home for you and your partner. Congratulations! Home ownership is a wonderful adventure you and your better half will enjoy for years. Of course, you better not forget all the details that come along with home ownership.

Whether you are married or living common law, here are 5 things that any couple that wants to get the most out of their new life as owners should know.

Who qualifies as a common law couple?

Both the federal and provincial governments recognize almost no obligations or rights between common law partnersAttention, this link will open a new tab.. In Quebec, they are regarded as two unmarried persons who have a conjugal relationship whose situation corresponds to at least one of the following:

  • They’ve been living together for at least 12 months
  • They are the parents of the same child or have legal guardianship over the same child

It’s important to note that married couples benefit from certain protections under family law and its various matrimonial regimes regarding their family patrimony, of which their residence is part. However, close to 40% of couples in Quebec are not marriedAttention, this link will open a new tab. and live common law. So it’s important for them to know that their residence is not protected by any rights and they themselves must take steps to get informed and protect themselves. They would therefore gain every advantage by consulting a notary.

Think about including the house in the division of propertys

“I’ve been living with my spouse for many years and we are not married. We’ve separated the expenses or one of us pays the current expenses while the other pays the mortgage. Isn’t it true that, if we separate, each of us will receive half of the resale value of the house, no matter who paid the mortgage?”

No, the only way to make sure each partner gets half the resale value of the house is if this is specifically stipulated in the deed of sale. You can also sign a common law partners agreement that determines who gets what.

As every notary and lawyer will agree, it’s better for unmarried couples to stipulate the terms of any termination of their life together and how their assets are to be separated in writing. That way they can decide together, in advance and more amicably, how they want to split up what they own, like the house, if ever they need to separate.

A common law partner agreement can be adapted to a couple’s situation and preferences. More generally, there are two approaches to defining the terms of a common law partner agreement

  • The autonomy approach: the partners decide and specifically identify the assets they want to separate, like the house and vehicles, for example
  • The participative approach: the partners agree to share any assets they acquired while living together 50-50, no matter who paid for what or in what proportion.

To ensure that everything is clearly understood and official, it’s important to work with a notary to draft and conserve a common law partner agreement, which can help you avoid nasty surprises if you ever need it!

Protect yourselves if your shares of the down payment are unequal

“My partner has a bigger down payment than I do. If we want purchase the house as equal partners, do I need to save more to raise an equal amount?”

No, you can detail your individual shares of the down payment in the deed of sale and still become equal partners in ownership.

When you meet the notary to draft the deed of sale, you can note the proportions of the down payment coming from you and your partner. In addition, you can recognize a debt between you if your individual contributions to the down payment are different, determining in advance the various terms like the total amount to be paid, the payment frequency and the interest rate.

If you ever need to sell the house, whether it’s part of a separation or not, you can easily determine how the proceeds of sale should be separated and the amounts due to each of you.

Ensuring that your partner inherits his or her portion of a house in case of your death

“If we both signed the deed of sale, in case of my partner’s death, do I automatically inherit my partner’s half of the house even if we’re not married?”

No, you will need a notarized will if you are common law spouses.

Common law spouses do not have a family patrimony so they do not automatically inherit the other partner’s possessions in the case of death. The only way to ensure that your common law partner inherits your assets is to make this wish clear in your will.

When you draft your will, you and your partner can add a clause regarding your share of the property or the sale of your home or its value.

If ever your partner should die without a will, the provisions of the Quebec Civil Code will determine your partner’s heirs and how his or her assets will be distributed. There are several rules that adapt to every situation, for instance, in the case of a property:

  • The house is divided equally among the children of the deceased partner.
  • If he or she is childless, half the value of the house goes to his or her parents. The other half goes to his or her brothers and sisters.

It isn’t necessary to see a notary to make a will, but it will be recognized more quickly and easily if it is notarized. The notary can also make sure that all the details of your succession are taken into account in order to simplify the succession process.

Know your HBP to get the most out of it

“My partner and I want to buy a house. She is the sole owner of the condo we currently live in. Am I eligible for the Home Buyers’ Plan (HBP) even if she isn’t?”

Not necessarily. Be sure to get fully informed on the terms of a HBP.

As a general rule, you are not eligible for the HBP if, over the course of the last 4 years or the current year, you or your partner owned a home. However, the terms of eligibility for the HBP were relaxed recently for divorced or separated persons who want to purchase a home with their new partner. For instance, if you want to purchase a home with your new partner, you can be eligible for the BHP once again, even if you already benefited from the plan at some time in the last 4 years.

It’s important to assess your conjugal situation and if you can benefit from the new eligibility rules. This is particularly true if you are thinking of using your RRSP as your main source of funds as you put together your down payment.

The house is always part of your patrimony in case of divorce

“My husband and I haven't been married a long time. He recently bought a house in his name alone from his own savings where we currently live together. If we divorce, does the house go to him alone seeing that he is the sole owner?”

No, the rules for family patrimony apply to all married partners.

Unlike common law partners, married couples are subject to the rules governing family patrimony. These establish which assets are included and how they are to be shared. The house they live in is part of the family patrimony and, in case of divorce, its value is divided between spouses, no matter who owned it.

Depending on the various matrimonial regimes and the type of asset sharing the members of a married couple decide on when they get married, the final value to be shared will vary and the calculation may take into account the time and manner in which the residence was acquired.

To be prepared for life’s ups and downs, common law partners, like married couples, have every interest in being well-informed and planning how they manage their family patrimony so as to avoid any future financial hardship. Sound financial planning today will help you enjoy life, stress-free and with total peace of mind, for a long time to come!

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