Buying together doesn’t have to mean equal shares
Statistics Canada reported, in the fall of 2012, that the number of Canadian households headed by unmarried couples is at an all-time high.
As families change, so do views about property. Fewer Canadians now see marriage as a prerequisite to home ownership. But many aspects of property law reflect a time when marriage was more common. When purchasing property with another person – whether a romantic partner or anyone else – keep in mind that there are ownership options: Buying together doesn’t have to mean owning equal shares.
Traditionally, when spouses purchased a home together they took title (ownership) “in joint tenancy”. This form of ownership means that the parties own equal “overlapping” half-shares (or third shares if there are three parties, etc.) in the entire property. When one party dies, his or her share automatically goes to the other party – and not to the deceased party’s dependents, if any. The expectation was, of course, that the parties would have shared dependents (children of the marriage) who would eventually inherit from the surviving parent.
Not only is this arrangement problematic for homebuyers who have children from previous unions (who might never inherit from the survivor), it also doesn’t make sense in certain other situations.
Consider a scenario in which a large downpayment comes from one of two joint purchasers. (The money may be an inheritance, a lottery win, or even just one person’s hard-earned savings.) The purchasers may intend to contribute equally to the mortgage payments after purchase, but they may want the initial unequal contribution to be compensated for somehow. A simple way to do this is to take ownership as “tenants in common”. The shares owned by tenants in common need not be equal: The parties in our example could agree to take 70 per cent and 30 per cent shares, respectively.
A share in a property owned by tenants in common can be sold or willed (left to heirs in a will) independent of the other shares. This means that partners who have children from former unions can will their shares to their own children.
This won’t be news to real estate lawyers, but its something lawyers in other areas that might overlap with real estate (such as wills, estates and family) should keep in mind.