Buying a House With an Unmarried Partner in Ontario

Buying a home together before marriage, or without ever marrying, is common. It is also one of the situations where a little planning on day one prevents the most trouble later, because the rules that apply to married couples do not simply carry over.

This article covers how you can hold title, what happens to property when an unmarried relationship ends, which agreements help, and how a partner can affect first-time buyer programs.

How you can hold title together

Co-owners hold title either as joint tenants or as tenants-in-common, and co-owners may agree to unequal shares. The choice affects what happens if one of you dies.

If one of you is putting in much more money, tenants-in-common with stated shares can reflect that. If you want the survivor to keep the home, joint tenancy does that. Your wills should fit whichever you choose.

What the law does on a breakup

Married spouses divide property through an equalization payment of net family property, and the full value of the family home is shared even if one spouse owned it before the marriage or received it as a gift or inheritance, unless the spouses agree otherwise. Common-law partners are treated differently.

Common-law partners are not required to divide property acquired during the relationship under Ontario's equalization rules. A partner who contributed to the other's property may need to go to court to recover that contribution.

Because the equalization rules do not apply to you, what each of you is entitled to depends on your situation and on any written agreement you have, so it is worth confirming with a lawyer. If only one of you is on title, the other may have to prove a contribution in court. That is slow and uncertain, which is the main reason to put your arrangement in writing before you buy.

Agreements that help

A cohabitation agreement can set property terms for common-law partners. Spouses who marry can use a marriage contract, which can exclude property, including the family home, and which both people must sign in front of a witness.

Points worth covering in a written agreement include:

• Who paid the down payment and how much each person contributed.
• How shares are held and whether they are equal.
• Who pays the mortgage, taxes, insurance and repairs.
• What happens if one person wants to sell or buy the other out.
• How gifts from relatives toward the purchase are treated.
• What happens if you later marry.

If you may marry later, ask a lawyer how that would change things, since the rules for married spouses differ and the time limit to apply to court for equalization is six years after separation or two years after divorce, whichever comes first.

Mortgages and first-time buyer programs

A mortgage can matter to ownership. In the land titles system, a charge registered by fewer than all the joint tenants does not automatically sever the joint tenancy, though it is severed if the chargee exercises power of sale or forecloses after a default.

Your partner's history can also affect programs. If a buyer's spouse owned an eligible home while married to or in a spousal relationship with the buyer, neither spouse qualifies for the Ontario first-time homebuyer land transfer tax refund. That refund is up to $4,000, and the buyer must never have owned an eligible home anywhere in the world.

To open a First Home Savings Account, you must be a resident of Canada, at least 18 (19 where that is the age of majority), and 71 or younger on December 31 of the year you open it, and you must be a first-time home buyer, meaning you have not lived in a qualifying home you owned or jointly owned as your principal residence in the current calendar year or the previous 4 calendar years. You must also not have lived, in that same window, in a home your spouse or common-law partner owned or jointly owned as your principal residence, and that condition does not apply if you have no spouse or partner. Ask an accountant how your relationship status counts.

A non-repayable financial gift from a relative is a traditional down payment source for CMHC insured mortgages. Record any gift in writing so it is clear it is a gift and not a loan or a contribution.

What to do next

• Decide together whether you will hold title as joint tenants or tenants-in-common and why.
• Write down each person's contribution to the down payment and closing costs.
• Have a lawyer draft a cohabitation agreement before closing.
• Update your wills so they match how you hold title.
• Check how your partner's housing history affects any first-time buyer refund or account.
• Keep records of payments toward the mortgage and improvements.

Frequently asked questions