# Buying property with my girlfriend



## neil (Apr 3, 2009)

First off, this is my first post on the forum, but I've read through some other posts, and there is some pretty good advice for people's questions. Now I need some advice of my own.

My girlfriend and I are purchasing a condo together. Because of our income difference, we won't be splitting the payments evenly, and I have paid much more of the downpayment than her (mostly from inheritance money). We have both agreed to what % of the mortgage, condo fees, property taxes, utilities etc... we'll pay, but we both realize that we need to have some sort of agreement in place in the event of a split up somewhere down the road.

If anyone has experience with this, can they let me know what they have done? We have thought about going to a lawyer to get a contract drawn up, but the expense is quite prohibitive. Has anyone has experience with 'template' contracts that are available? If so, can anyone suggest one to use?

Thanks in advance for the advice,


----------



## Rickson9 (Apr 9, 2009)

neil said:


> First off, this is my first post on the forum, but I've read through some other posts, and there is some pretty good advice for people's questions. Now I need some advice of my own.
> 
> My girlfriend and I are purchasing a condo together. Because of our income difference, we won't be splitting the payments evenly, and I have paid much more of the downpayment than her (mostly from inheritance money). We have both agreed to what % of the mortgage, condo fees, property taxes, utilities etc... we'll pay, but we both realize that we need to have some sort of agreement in place in the event of a split up somewhere down the road.
> 
> ...


You could use a paralegal.


----------



## mfd (Apr 3, 2009)

neil said:


> First off, this is my first post on the forum, but I've read through some other posts, and there is some pretty good advice for people's questions. Now I need some advice of my own.
> 
> My girlfriend and I are purchasing a condo together. Because of our income difference, we won't be splitting the payments evenly, and I have paid much more of the downpayment than her (mostly from inheritance money). We have both agreed to what % of the mortgage, condo fees, property taxes, utilities etc... we'll pay, but we both realize that we need to have some sort of agreement in place in the event of a split up somewhere down the road.
> 
> ...



either figure out how to split the purchase 50/50 or get a lawyer because if you don't it could cost you more in the end.


----------



## takingprofits (Apr 13, 2009)

neil said:


> We have thought about going to a lawyer to get a contract drawn up, but the expense is quite prohibitive.


The cost of NOT going to a lawyer is what you should be concerned about...


----------



## FrugalTrader (Oct 13, 2008)

As well, i've read that it's best to keep inheritances separate. Things get messy when it's mixed into a matrimonial home.


----------



## michika (Apr 20, 2009)

We had legal documents drawn up with our house purchase. The lawyer/paralegal likened them to a pre-nup without the nuptuals. They cost us $1500, plus $550-ish for our house related costs, I paid a total of $2,200 when it was all said and done with.

We also have a income difference like you've mentioned. The downpayment was 50/50 on our house so we worked that in. Our documents basically say in the event of a dissolution of our partnership that we can a) continue to be joint owners in the house, b) buy out the other party, or c) sell. The selling provisions are basically that we divide up the profit based on a pre-decided ratio, in our case its 65/35 after all the selling costs are accounted for. The ratios can also be adjusted as time goes one.

Our contract also includes a division of assets, such as furniture, my designer purse collection, my dogs, the 1000g saltwater tank, and the vehicles. We also included a clause for debt, however shortly it will irrelevant.

It was also recommended that we include photos with our documents of my purses, jewelry, and the antique furniture. Pets had to remain registered in my name.

I feel much better about our relationship, plus it got our families off our backs about not being married.


----------



## George (Apr 3, 2009)

I'll go out on a limb here and say that it's a *really bad* idea to make such a major purchase with a "boyfriend" or "girlfriend". Personally, I wouldn't even contemplate purchasing real estate with somebody with whom I wasn't married, or at the very least engaged.

Even with legal agreements, there are way too many "what-ifs" in this scenario that make things extremely painful and complicated if the relationship goes sour.


----------



## mhd (Apr 7, 2009)

From a tax perspective, once you are living in the condo together, you should each file your taxes separately (i.e. not as a common-law). You would each earn a better tax return (see line 303 on fed. schedule 1 and line 5812 if you live in Ontario).


----------



## Germack (Apr 4, 2009)

mhd said:


> From a tax perspective, once you are living in the condo together, you should each file your taxes separately (i.e. not as a common-law). You would each earn a better tax return (see line 303 on fed. schedule 1 and line 5812 if you live in Ontario).


Filing taxes separately or as common law is not an option. Once you have been living together for one year you must file as common law.


----------



## onomatopoeia (Apr 8, 2009)

George said:


> I'll go out on a limb here and say that it's a *really bad* idea to make such a major purchase with a "boyfriend" or "girlfriend". Personally, I wouldn't even contemplate purchasing real estate with somebody with whom I wasn't married, or at the very least engaged.
> 
> Even with legal agreements, there are way too many "what-ifs" in this scenario that make things extremely painful and complicated if the relationship goes sour.


Remember that some people don't want to get married. 

Personally, it would be a huge mistake if the OP didn't get a lawyer to draw up some documents, otherwise if they split there is no reason for it not to be 50/50. Yeah there may be some what-ifs, but without the contract there is nothing.


----------



## MoneyGal (Apr 24, 2009)

...or the moment you have a child together, if sooner than the 12 continuous months of cohabitation. 

Also - I don't know family law rules on matrimonial homes for all provinces, but in Ontario there is no matrimonial home in common-law relationships. However, in the event of a breakdown of a common-law relationship, one CL spouse may claim up to 50% of the value of the home by using a constructive trust. 

Add my voice to the chorus of people saying it would be a good idea to at least consult with a family lawyer to get a sense of your obligations to one another in the event of the breakdown of your relationship, if not a formal agreement. There are a lot of factors to consider. 

Actually, I think this is probably not a bad idea even if you were getting legally married. The intermingling of inheritance money, as Frugal Trader noted above, is a complicating factor. In the event of a marriage breakdown, inheritances are not considered joint property and subject to the division of matrimonial assets. However, once you put an inheritance into a matrimonial home, any separate claim you have on it is lost. 

My interest in financial planning was in large measure spurred by how much I didn't know and learned over the course of divorcing in Ontario. I was *really surprised* how much people *don't* talk about the financial implications of marriage and divorce to people who are getting married (if that makes sense...)

I don't mean to put any kind of a damper on your relationship - but I do think it is wise to go into this kind of situation with your eyes open.


----------



## MoneyGal (Apr 24, 2009)

(My taking so long to post meant that there was another post inbetween the one I was responding to and mine!)

I should be clear: in the event of a breakdown of a CL relationship where there is no legal agreement about the division of property in the event of the breakdown of the relationship, either spouse can make a claim for up to 50% of the property acquired over the course of the relationship (including the home). 

This has nothing to do with who contributed more as a downpayment or to the payment of current bills. It has to do with how the courts view marriages, whether common-law or legal, as a joint enterprise between two people. 

One spouse can still make a claim using a constructive trust (also called a "resulting trust") for more than what is set out in a legal agreement even where there is an agreement (much like a pre-nup can be contested). However, a legal agreement will always be better than no agreement, especially for common-law relationships, where the rules are not clear-cut.


----------



## lazy cdn (Apr 3, 2009)

*fractional investments.*

does it make financial sense to buy a fractional property ?

what are the +ve's and -ve's ?

thanks


----------



## Kalynn12 (Apr 20, 2009)

*I was in the same boat*



neil said:


> First off, this is my first post on the forum, but I've read through some other posts, and there is some pretty good advice for people's questions. Now I need some advice of my own.
> 
> My girlfriend and I are purchasing a condo together. Because of our income difference, we won't be splitting the payments evenly, and I have paid much more of the downpayment than her (mostly from inheritance money). We have both agreed to what % of the mortgage, condo fees, property taxes, utilities etc... we'll pay, but we both realize that we need to have some sort of agreement in place in the event of a split up somewhere down the road.
> 
> ...


Hi Neil,

My boyfriend and I actually went through the same scenario two years ago. He had an inheritance that made his part of the down payment 8x higher then mine, the one difference for us is that after the down payment we have split everything evenly.

What we did was use the same lawyer as for our closing and had him write up a co-habitation agreement. The cost was approximately $200. It outlined our separate deposits, how costs would be split going forward, what would be the course of action if someone wanted to sell, what would happen if someone was not making their payments, etc.

Neil, I think the biggest thing is to take a hard look at your relationship and your girlfriends personality. Are you guys in it for the long run, is she responsible, if you were to break up how do you think each of you would take it (this one is especially important, having someone who is vengeful is not a good thing). A co-habitation agreement isn't bulletproof but its also less expensive then other options, you just need to know that you both have a clean understanding of it and know that the other person wouldn't challenge it. Personally I know both of us will stand by the agreement and besides that I would never go after someone's money especially not an inheritance he received from the passing of a parent. 

Make sure you are both honest about your debts and money personality types ahead of time so there are no surprises later on. My boyfriend and I have pretty similar money personalities (we are both savers, 4 more years and our condo is paid off!) but I have had friends fight over these things. What I would suggest doing (also how we did it but alot of my friends haven't) is have a joint checking account where you put the set amount of money you have decided upon that will cover all of the household bills (in your situation, add up all the household bills and then times it by the percentage that you each have decided on paying). I would suggest doing this monthly just like you did with rent. Then all of the household expenses (mortgage, condo fees, insurance, utilities, food, evenings out, etc) come out of that account. Then the remaining part of your salary stays in your personal account to do with as you please and you don't have to answer to anyone about it. This will stop many fights and makes it easier if you ever do decide to part ways.

Good luck, we have had a great experience and I hope you do too. Feel free to message me if you have any questions.


----------



## Alexandra (Apr 3, 2009)

In this situation, I would just buy the property on my own, and have my girlfriend pay rent to me as a tenant. If this means borrowing money for the rest of the downpayment, so be it.


----------



## furgy (Apr 20, 2009)

I'll take another approach on this.

While it may make sense financially and legally , if two people who are presumably entering a life commitment together don't have 100% faith in their relashionship and are preparing for a worst case scenario , the worst probably will happen.

In my mind if you are already doubting the outcome of you relationship , perhaps it is best to wait until you feel more confident.

I've known very religious people who have entered into pre-nup agreements , it seems they have more faith in their god whose existence is doubtful at best , than they do in their own commitments.

Just my opinion , I wouldn't enter into a relationship where I wasn't 100% confident.


----------



## OhGreatGuru (May 24, 2009)

onomatopoeia said:


> Remember that some people don't want to get married.
> 
> Personally, it would be a huge mistake if the OP didn't get a lawyer to draw up some documents, otherwise if they split there is no reason for it not to be 50/50. Yeah there may be some what-ifs, but without the contract there is nothing.


Then they should have a co-habitation agreement that covers all these asset isues.


----------



## ThickenMyWallet (May 20, 2009)

There's a myraid of issues here (I'll avoid the bf-gf issue).

1. Title. There are two primary ways to take title: Joint tenancy or tenants in common. In the former, if one person dies, the title automatically transfers to the survive. In the latter, the title is split in whatever % the parties decide with no right of survivorship (in other words, the % of title of the deceased goes to the beneficiary of their will or, if there is no will, as per the designated parties set out in provincial law).

2. Mortgage. Mortgagor will most likely be the both of you. Do you both have strong credit histories and given that liability will most likely be joint and several (i.e. you are both on the hook), can both of you commit to the other to pay the mortgage?

3. Common law marriage. If you fall within the definition of common law marriage (again look at the appropriate provincial legislation), each spouse in the marriage is entitled to spousal support, child support and custody. In Ontario, you have to remember that common law marriage falls under part 3 of the Family Law Act which deals with support payments.

4. Co-Habitation Agreement- see other comments.

Visit a lawyer for a free consultation and ask them about all four issues. Good luck.


----------

