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Dividing Assets (House) After Common-Law Split

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  • Dec 11th, 2009 5:07 pm
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Newbie
Jan 3, 2007
25 posts
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Dividing Assets (House) After Common-Law Split

Hello.

My common-law partner and I are separating. :( Earlier this year we purchased a house, which is in both of our names. I intend to stay in the house and continue paying the mortgage by myself.

I know that if an asset is in both of our names, then we are each entitled to half of its value. Therefore I need to ‘pay off’ my partner.

Here are my questions:

1. How do we determine the value of our house? Would it simply be the price we paid for it?
2. How is the remaining amount owed on the house (mortgage) taken into account?
3. Given that my after-tax income has consistently been 4-5X my partner’s, how can I make the split fairer in recognizing my greater contribution toward the purchase of the house?
4. Can we legally divide the asset (house) without each having to hire lawyers?

Thanks in advance for any help.
25 replies
Member
Feb 19, 2008
415 posts
4 upvotes
bc
anville wrote:
Dec 9th, 2009 5:59 pm
Hello.

My common-law partner and I are separating. :( Earlier this year we purchased a house, which is in both of our names. I intend to stay in the house and continue paying the mortgage by myself.

I know that if an asset is in both of our names, then we are each entitled to half of its value. Therefore I need to ‘pay off’ my partner.

Here are my questions:

1. How do we determine the value of our house? Would it simply be the price we paid for it?
2. How is the remaining amount owed on the house (mortgage) taken into account?
3. Given that my after-tax income has consistently been 4-5X my partner’s, how can I make the split fairer in recognizing my greater contribution toward the purchase of the house?
4. Can we legally divide the asset (house) without each having to hire lawyers?

Thanks in advance for any help.
Wouldn't you get an assessment, subtract the mortgage, and split the difference? Seperation of assets would depend on length of cohabitation, province of residence, etc.
Deal Addict
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Jan 11, 2004
4539 posts
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Victoria
In BC and I bet most of Canada common law partnerships mean NOTHING. You do not have to split anything 50-50 at all. So I would just make sure you get as much as possible. Split all debts 50-50 and take all the assets. There's no difference between this and normal bf-gf breakups. No court proceedings no lawyers needed other than your real estate situation.
[OP]
Newbie
Jan 3, 2007
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Additional info: I'm in Ontario, and was in the common-law relationship for >11 years.
Thanks for replies so far.
Member
Feb 19, 2008
415 posts
4 upvotes
bc
dealguy2 wrote:
Dec 9th, 2009 6:19 pm
In BC and I bet most of Canada common law partnerships mean NOTHING. You do not have to split anything 50-50 at all. So I would just make sure you get as much as possible. Split all debts 50-50 and take all the assets. There's no difference between this and normal bf-gf breakups. No court proceedings no lawyers needed other than your real estate situation.
In Ontario, alimony can be paid after 3 years, according to this source

As well, a spouse could sue for unjust enrichment, if for example they supported a spouse through school.
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Dec 11, 2005
18500 posts
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anville wrote:
Dec 9th, 2009 6:22 pm
Additional info: I'm in Ontario, and was in the common-law relationship for >11 years.
Thanks for replies so far.
dealguy2 wrote:
Dec 9th, 2009 6:19 pm
In BC and I bet most of Canada common law partnerships mean NOTHING. You do not have to split anything 50-50 at all. So I would just make sure you get as much as possible. Split all debts 50-50 and take all the assets. There's no difference between this and normal bf-gf breakups. No court proceedings no lawyers needed other than your real estate situation.
Even you are right on the legalities (I am not sure you are in Ontario, and you are dEFINITLY wrong in NB, as you can see at http://www.canlii.org/en/nb/laws/regu/n ... -98-6.html....), this would be a pretty douchebag move to make given they were together for 11 years.

OP - It is pretty simple. I would take the amount you paid for the house, subtract the outstanding mortgage balance, which is easy to get from your bank. That is the equity you have in the house, the ex-spouse is owed half that. The amount you make more than the spouse is irrelevant for all assets acquired *during* the marriage.
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Deal Addict
Apr 1, 2004
1582 posts
28 upvotes
anville wrote:
Dec 9th, 2009 5:59 pm
Hello.

My common-law partner and I are separating. :( Earlier this year we purchased a house, which is in both of our names. I intend to stay in the house and continue paying the mortgage by myself.

I know that if an asset is in both of our names, then we are each entitled to half of its value. Therefore I need to ‘pay off’ my partner.

Here are my questions:

1. How do we determine the value of our house? Would it simply be the price we paid for it?
2. How is the remaining amount owed on the house (mortgage) taken into account?
3. Given that my after-tax income has consistently been 4-5X my partner’s, how can I make the split fairer in recognizing my greater contribution toward the purchase of the house?
4. Can we legally divide the asset (house) without each having to hire lawyers?

Thanks in advance for any help.
This stuff partly depends on whether you want to argue over the letter of the law, or just do what you think is fair. Personally, not following the law at all, it kinda goes to the question of whether you two viewed yourselves as a "single indivisible whole' during your relationship. Did you two make joint decisions, consider your wealth together, make financial sacrifices for one another, etc, etc, etc...

At least in those circumstances, I would personally just follow the classic approach of (Current Market Value of Net Assets - Original Market Value of Net Assets) = Growth in Net Assets. I would then divide this in two, and somehow divide up assets so that each party would get half of the growth + their original contribution.

Specific to your house? Again, assuming the whole "indivisible whole" view of your relationship, I think current market value HAS to be the price to take into account, along with the current mortgage on the property. And you have to hire lawyers in Ontario to convey real estate.... I think. You should call up a lawyer and ask if it's mandatory.
Newbie
Mar 30, 2008
71 posts
3 upvotes
Toronto
Icedawn and Brunes are correct - it's your equity in the house (based on current FMV) divided in half.

About the lawyer (or lack thereof) - you will obviously need one to get your ex's name off title (that should be cheap).

You don't necessarily need one for the division of assets but 9 times out of 10 one of the spouses feels he or she needs one to protect themself and than the other has to get one. Don't pay more than $300 an hour unless the assets we're talking about are seven figures. Ask around for referrals - everyone knows lots of people who have been through it unfortunately!
Deal Fanatic
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Nov 13, 2005
5670 posts
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GTA
anville wrote:
Dec 9th, 2009 5:59 pm
Hello.

My common-law partner and I are separating. :( Earlier this year we purchased a house, which is in both of our names. I intend to stay in the house and continue paying the mortgage by myself.

I know that if an asset is in both of our names, then we are each entitled to half of its value. Therefore I need to ‘pay off’ my partner.

Here are my questions:

1. How do we determine the value of our house? Would it simply be the price we paid for it?
2. How is the remaining amount owed on the house (mortgage) taken into account?
3. Given that my after-tax income has consistently been 4-5X my partner’s, how can I make the split fairer in recognizing my greater contribution toward the purchase of the house?
4. Can we legally divide the asset (house) without each having to hire lawyers?

Thanks in advance for any help.
1. full Appraisal by both parties should do the trick in determining the current value of the home
2. Once you both determine the current value, subtract any encumbrances from the value (i.e. mortgages 1st and 2nd, Helocs). Once you figured this net worth, then divide in 1/2. Half is yours and half is hers.
3. It doesn't matter that your income was greater than hers. Can you imagine what life would be like for those stay at home moms who never had a job???
4. You can both try this on your own or approach a mediator who will help in this matter.

Remember one thing, your partner can force you to sell the home if she has an axe to grind. Apparently there was a Supreme Court Ruling a few months ago that stated that although one party is willing to buy out the other, you cannot force the other to sell their share to the willing party. You may want to look this up.

I hope this helps. I'm not a lawyer but I've learned a lot about family law in the past couple of years!!!!

sk
Deal Addict
Aug 28, 2007
1787 posts
213 upvotes
Calgary
A lot depends on how amicable the breakup is. If it is not acrimonious, then sunnybono's suggestion of a cool headed calculation and a mediator is great. (Or if you are just happy to get out and can afford to be very magnamimous).

However, if you're trying to screw over your ex for every nickel, then one way or another, you'll end up having a big legal bill. The fewer lawyers that get involved the more value there will be left to split between the parties.
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Nov 11, 2004
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Dont pay more then 300 a hour.

Anyone else here find that a bit Crazy?
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Jul 14, 2008
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Ontario
If using FMV to divide the asset, as opposed to price paid, is there any recourse for the party who wishes to keep that asset if the home drops in value dramatically? Or just the chance they take?
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Jun 19, 2006
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anville wrote:
Dec 9th, 2009 5:59 pm
1. How do we determine the value of our house? Would it simply be the price we paid for it?
Get an appraisal(s) that you can agree upon, or simply sell it, and let the ultimate appraising power of the market do its magic. You could negotiate a "right of first refusal" between you and the spouse if one of you wishes to keep the house.
2. How is the remaining amount owed on the house (mortgage) taken into account?
You would want to contact the bank and get a cost of how much it would cost to liquidate the mortgage debt that you owe. This would likely include a cancellation penalty or interest rate differential.
3. Given that my after-tax income has consistently been 4-5X my partner’s, how can I make the split fairer in recognizing my greater contribution toward the purchase of the house?
If you're common-law, there's not much you can do. Common-law, in most provinces, is just as good as marriage. Generally, with marriage, home equity is split in half regardless of who actually paid into it.
4. Can we legally divide the asset (house) without each having to hire lawyers?
Generally, not. In Alberta, for instance, The Dower Act requires that each spouse obtain independant legal advice before the disposition of a marital house. In Saskatchewan, its The Homestead Act. Similar legislation exists in all other provinces. You both need to seek independant legal advice on the matter, and Land Titles will not process the transaction without an appropriate statutory declaration that you have complied with those laws.
"I worked with several H1B employees that were/are borderline ********. One of them wanted to spray an electrical patch panel with solvent to see if it would make the “network go faster”". <--- lol (source)
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Jun 19, 2006
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onlineharvest wrote:
Dec 9th, 2009 9:41 pm
If using FMV to divide the asset, as opposed to price paid, is there any recourse for the party who wishes to keep that asset if the home drops in value dramatically?
"FMV" means nothing unless one of the partners wishes to actually pay for the other half of the asset (or obtain financing to do so). Once they do that, its theirs, and any profit or loss associated with that would belong to them.
Or just the chance they take?
Yup.
"I worked with several H1B employees that were/are borderline ********. One of them wanted to spray an electrical patch panel with solvent to see if it would make the “network go faster”". <--- lol (source)
[OP]
Newbie
Jan 3, 2007
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One more question: Do I *have to* pay my ex one half of the equity in the house, even if she agrees that it's not fair compared with what we each paid in?
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