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Purchasing a home is a significant milestone for any couple, but it comes with specific legal considerations for common-law couples that can greatly impact property ownership and rights. As an experienced realtor in the Greater Toronto Area, I understand the complexities that can arise when common-law couples decide to invest in real estate together.
In this blog post, we will explore seven key elements common-law couples should consider before purchasing a home in the Greater Toronto Area.
1. Understand the Legal Implications:
In Ontario, the Family Law Act does not grant common-law couples the same automatic property rights and protections as married couples. It is essential to recognize that property ownership and division for common-law couples are determined by property law principles and any agreements or arrangements made by the couple.
Seeking advice from a family lawyer specializing in common-law relationships will clarify the legal implications and protect both partners' rights.
2. Ownership Structure:
Determining the ownership structure of the property is crucial to avoid potential conflicts in the future. Common-law couples can choose between joint tenancy and tenancy in common.
Joint tenancy ensures equal ownership; if one partner passes away, their share automatically transfers to the surviving partner. Tenancy in common allows partners to own unequal shares based on their contributions. Clearly defining the ownership structure ensures transparency and minimizes disputes.
3. Co-Ownership Agreements:
Drafting a co-ownership agreement is highly recommended to establish the rights and responsibilities of each partner regarding the property. This legally binding document addresses important matters such as mortgage payments, property maintenance, and the distribution of proceeds in the event of a sale.
Engaging a lawyer to draft a comprehensive co-ownership agreement protects both partners' interests and reduces the likelihood of future conflicts.
4. Plan for the Unexpected:
Considering the possibility of the relationship ending is a difficult but necessary step in protecting both partners' interests. Establishing a legally binding agreement that outlines the disposition of the property in the event of separation or death can help prevent protracted and costly legal battles. You can save time, money, and emotional distress by addressing these potential scenarios upfront.
5. Financial Payments and Options:
Before you begin the purchasing process, it is important that you and your partner sit down to discuss and agree on financing options. Questions to consider, include;
- Will you both contribute equally to the down payment and mortgage payments?
- Will it be proportionate to each partner's income or investment?
- Which bank account will the payments come from?
- Will it be one of your bank accounts or a joint account you must set up?
Defining these terms beforehand will ensure financial clarity and avoid misunderstandings, making the purchasing process and any decisions related to the property much easier.
6. Consult a Mortgage Specialist:
Navigating the mortgage process can be complex, especially for common-law couples. I always recommend that my clients consult a mortgage specialist who has experience working with common-law couples so that they can understand all of their options.
This way, you can be prepared, and if you have any questions or concerns, a mortgage specialist can help guide you through the process, explain available mortgage options, and help you understand the implications of each choice.
7. Work with an Experienced Real Estate Agent:
Purchasing a home is a significant financial decision, and seeking a professional's advice is crucial throughout the process. Engaging an experienced realtor who understands the unique needs of common-law couples in the Greater Toronto Area is essential.
A realtor can provide guidance, negotiate on your behalf, and help you find a property that aligns with your requirements and budget. As well as outline certain implications and highlight key considerations throughout the process so that you and your partner are aware.
Purchasing a home together as a common-law couple in Ontario requires careful consideration and planning. Understanding the legal implications, defining ownership structures, and creating a co-ownership agreement are crucial steps to protect both partners' interests. By taking the above mentioned key factors into account, you can navigate the home buying process with confidence and set a solid foundation for your future together.
If you are interested in learning more or are ready to start our home buying journey, we can help. Download our home buyers guide or contact us today for a no obligation consultation.
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