Buying a House with Your Common-Law Partner in Ontario: Legal Risks

Buying a home together is an exciting milestone for any common-law or married couple. For couples who are living together without being legally married, however, purchasing property together can create legal risks that many couples do not fully understand until the relationship ends or one partner passes away.

Why does being a common-law couple matter?

In Ontario, married spouses have property division rights under the Family Law Act, including the equalization of net family property and special protections for the matrimonial home.

Common-law couples do not receive these automatic protections.

• There is no automatic 50/50 split for common-law partners.
• Property ownership is usually determined by who is listed on title. However, in some situations, a court may recognize a claim by the non-owner if they can prove significant financial or other contributions to the property.
• If disputes arise, the non-owner may need to rely on complex legal claims to establish an interest in the property.

Introducing Sadie and John

Sadie works part-time and is still in university, and John has an established career as an architect. They currently live separately. John rents an apartment, and Sadie still lives with her parents as she focuses on school and managing her student loans.

As their relationship grows more serious, Sadie and John decide they’re ready to buy a home together. When they meet with their mortgage lender for a pre-approval, however, they quickly realize that Sadie’s student loan debt and her limited income make it difficult for her to qualify for a mortgage.

John is approved for the mortgage on his own, which seems like a practical solution. The couple continues house hunting and eventually finds the perfect starter home within their budget. Their offer is accepted, and they move forward with the purchase.

During the closing process, their real estate lawyer asks how they would like to take title to the property. Because John is the one approved for the mortgage, they agree to register the home in John’s name alone, and Sadie will contribute financially as she is able.

Four years later, their relationship comes to an end. Sadie moves out and returns to live with her parents while they figure out how to move forward by dividing assets, including the home they lived in together.

This is when the legal reality becomes clear.

How does the way you take title matter?

Under Ontario law, common-law partners generally have no automatic right to property owned by the other partner. Being on title matters more than how long you’ve been together.

Because the home is registered solely in John’s name, the law presumes that the house belongs to him. Sadie may not automatically have a legal claim to the home’s equity, unless she can prove she made significant financial contributions that created a legal interest in the property.

What can you do differently?

• Understand how title works before purchasing property together. Whether you hold title as joint tenants or tenants in common can affect ownership and what happens if the relationship ends.
• Document financial contributions. If one partner contributes more to the down payment or expenses, it is important to clarify whether those contributions are intended as a gift, loan, or ownership interest.
• Consider a cohabitation agreement or a co-ownership agreement *. A written agreement prepared by a family lawyer can outline how property will be handled if the relationship ends.
• Ensure your wills and estate plans reflect your intentions. Without proper planning, a surviving partner may not automatically inherit the home.

We’re here to help

Life transitions such as cohabitation, marriage, divorce, and/or death will have a significant impact on your real estate, will and estate plans.

McMurter & Associates can be a trusted advisor, helping you to navigate real estate transactions (including advising on title structure) and with wills and estate planning (including Powers of Attorney and beneficiary review).

Disclaimer: This article is intended as an informative piece about the subject. It should not be taken as legal advice. We recommend you connect with a real estate lawyer or estate lawyer about your specific legal situation.

*McMurter & Associates does not prepare cohabitation agreements, but we would be happy to refer clients to appropriate resources.