Mortgage Co-Signing as Common-Law Partners: Risks if You Split

Many common-law couples sign a mortgage together. Others have one partner on the loan and the other on title, or the reverse. It often feels like a practical step at the time, but if the relationship ends, the lender's paperwork and the land registry records matter as much as who paid what.

This article explains the risks of being a co-signer or joint borrower, how title and the mortgage can differ, and the usual ways people exit. It is general information. The right path depends on your documents, so a lawyer can confirm it for your situation.

What co-signing means to the lender

When you are a joint borrower or co-signer on a mortgage, loan or line of credit, you become equally responsible for repaying the unpaid balance. That is a promise to the lender, not to your partner. How a breakup or a private arrangement between the two of you affects the loan depends on your lender's terms, so it is worth confirming with a lawyer.

Joint borrowers are also each entitled to the same statements as the other borrowers, at least with federally regulated institutions. If you are unsure of the balance or whether payments are current, ask the lender for the statements before you make any decisions.

Loan and title are two different questions

The mortgage says who owes the lender. The title says who owns the land. They do not always match. You might be on the loan to help the household qualify but not on title, or on title but not on the loan. Each combination creates different risks.

If land is conveyed to two or more people, the law treats them as tenants in common unless the document shows otherwise, even if they are spouses. With joint tenancy the surviving co-owners inherit a deceased owner's share, while with tenants in common the share becomes part of the deceased owner's estate. Check your title to see which one you have.

There is no automatic split for unmarried partners

For property equalization, a spouse means someone who is married, so unmarried partners are not spouses for that purpose. Common-law couples are not legally required to split property acquired while living together, and furniture and household items belong to the person who bought them.

That does not mean the partner who is not on title has nothing. If you contributed to property your partner owns, you may have a right to part of it, but unless your partner agrees to pay you back you may have to go to court to recover your contribution. Unmarried partners can claim unjust enrichment, and where there is a joint family venture the remedy can be a proportionate share of the wealth accumulated, linked to contributions. There is no presumption of a joint family venture, and intent and conduct weigh heavily.

Time limits matter. The basic limitation period is two years from the day a claim was discovered, with a 15-year ultimate limit. That general rule applies to claims such as unjust enrichment between former partners. When the clock starts in your situation depends on the facts, so get advice early.

Ways to exit a shared mortgage

• Agree to sell the home, pay off the mortgage from the proceeds and divide what is left by agreement.
• One partner buys out the other and takes over the borrowing. Lender approval and release terms vary, so ask the lender what it requires.
• Ask a court for partition if you cannot agree. Any person interested in land may bring an action or application for partition, and the court may order a sale instead if that is more advantageous to the parties.
• Settle the money questions in a written agreement, ideally before anyone signs a transfer or a new mortgage.

Be careful about taking out new borrowing on the home without the other owner. Registering a mortgage by fewer than all joint tenants does not automatically sever the joint tenancy, although severance can occur through the lender's power of sale or foreclosure. That can leave results you did not intend.

Land transfer tax can also come into play on a transfer between partners. Transfers between spouses or former spouses can be exempt in certain cases, such as a transfer under a court order or one that complies with a written separation agreement. For this purpose, spouse uses the Family Law Act support meaning, which includes some unmarried couples. Taking over the mortgage counts as consideration. Ask a lawyer whether an exemption fits your facts.

Protecting yourself before and after a split

Common-law couples can sign a cohabitation agreement setting terms if the relationship ends, including ownership and division of property and support. It must be in writing, signed and witnessed to be enforceable. Each partner should use a different lawyer and exchange financial information. A court can set aside a contract if a party failed to disclose significant assets or debts, or did not understand its consequences.

What to do next

• Get a copy of your mortgage documents and the latest lender statement.
• Search title to confirm who is on it and whether you hold as joint tenants or tenants in common.
• Gather records of who paid the down payment, mortgage, taxes and repairs.
• Do not sign new borrowing, a transfer or a release until you understand it.
• Note any dates that could matter for time limits and speak to a lawyer early.

Frequently asked questions