Buying real estate as a couple

Is it possible to purchase a property together without being married? Of course! The real question is rather how to do so!

Buying a house or condo together is a big step in the life of a couple. But before taking the step, it is advisable to take certain predispositions to best protect yourself in the event of death or separation.

So how do you buy a house or an apartment for two? Let me explain!

 

What is implied when buying as a couple

You are both owners and you each own a percentage of the property.

Generally, the proportion is calculated according to the personal contribution of each and the contribution to the repayment of the mortgage. So far, no problem, but what happens in the event of death or separation?

 

Purchase without being married…. What happens in the event of death?

Even after 40 years together, common-law spouses do not inherit from each other upon death, as they are not recognized as related in the eyes of the law.

The only way to allow your partner to inherit your property is to make a will. Failing this, it is the family of the deceased who will receive their property, as indicated in Quebec’s Civil Code.

Without a valid will, the Civil Code of Quebec provides that:

  • The deceased’s share of the property will go to their children in equal shares.
  • If the deceased has no children, half of the value of their share will go to their parents. The other half will be given to his brothers and sisters.
  • When you write your will, you and your spouse can include several clauses concerning the share of the property that is yours, its value, the conditions for its resale, etc.

 

Purchase without being married…. What happens in case of separation?

Beyond all the emotional charge caused by a breakup, without a purchase agreement between individuals, you can quickly find yourself in very delicate situations.

In case of separation, several scenarios are available:

  • You jointly decide to sell the property.
  • If this is the case, generally depending on the initial distribution, each will recover the sale price on its respective share.
  • You jointly decide that one of you will keep the house.

You both agree but how to establish the value of the house? How to redeem and at what price to redeem the share of your de facto spouse? How long do you have to redeem its shares? Many questions that risk further complicating a separation that can already be a difficult time to pass.

 

And what happens if you can’t come to an agreement?

Example: Marie and Benjamin live together and want to buy a house in Ahuntsic. Marie applies for a mortgage to finance 60% of the sale price of the coveted apartment, while Benjamin covers the remaining 40%. Unless otherwise stipulated, Marie will own 60% of the house and Benjamin 40%.

When they separate, Marie and Benjamin both want to keep the house, but it is impossible for them to consider living together. They are forced to put it up for sale. But they also disagree on the value of the property. They each take their evaluator but neither falls on the same valuation. Nor are they on the same wavelenght on the conditions of resale… So many gray areas that risk further complicating their separation and darkening the picture. Marie and Benjamin will then have to rely on a judge…

If they had anticipated this and decided to prevent the unforeseen events of life through a purchase agreement, then everything would be simpler!

All notaries will tell you that it is preferable for unmarried couples to formalize the terms of the end of their life together and the separation of their property in a purchase agreement. As the famous saying goes “better be safe than sorry.”

If the separation is done amicably and if the acquisition was made 50/50 in down payment and participation in the mortgage, so much the better! But that’s not always the case… And if you haven’t answered these questions beforehand, it will be even more painful to do so once the separation is formalized.

 

What is a purchase agreement between individuals?

Like a shareholder agreement for a business, a purchase agreement protects your interests and your respective property as de facto spouses in the event of a breakup.

This document indicates how the value of your property will be determined if your paths separate, as well as the terms of payment, the conditions of sale, the compensation provided, etc. You can add whatever clauses you want. The idea is simply to formalize the terms of the transfer and distribution of the property.

Yet very practical and avoiding a lot of disputes in the event of separation, today, the purchase agreement between individuals is used by less than 10% of de facto spouses in Quebec, according to Maître Beaudoin. Don’t make the same mistake as many unmarried couples!

 

What should a purchase agreement between individuals include?

It’s up to you to decide what is important to you. Generally, in a purchase agreement between individuals, we find the following elements: rule of contribution to household expenses and other expenses, the goods and personal effects belonging to each spouse, the method of evaluating the resale value, the preferential rights, and the conditions for sale and redemption. You can, of course, add personalized clauses, which consider the uniqueness of your situation.

 

Who can make this agreement?

Although you can do this convention alone, I strongly recommend that you do it accompanied by a professional. I would be delighted to refer you to notaries who are used to dealing with these subjects and who can draw up an agreement that perfectly meets your needs and your situation. Taking a few minutes now to answer these questions in advance in the event of a problem can save you a lot of trouble in the future in the event of unforeseen events…!

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