Personal Finance

Is there a common law prenup?

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  • Jul 18th, 2018 7:36 pm
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[OP]
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Jan 21, 2017
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Is there a common law prenup?

Context, SO is moving in. I am the owner of the condo. Would it be wise to draft up a basic "pre nup" as insurance? My understanding is after a year or two, the roommate status turns into common law, which has some legal implications? Clearly not an expert, thus want to ask to learn more.
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Deal Addict
Nov 22, 2015
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DPR2017 wrote:
Jul 12th, 2018 8:28 am
Context, SO is moving in. I am the owner of the condo. Would it be wise to draft up a basic "pre nup" as insurance? My understanding is after a year or two, the roommate status turns into common law, which has some legal implications? Clearly not an expert, thus want to ask to learn more.
Common law works differently in each province..

If you're in Ontario, I believe there is no right to common-law property. If you split, you take your own stuff and go, just as if you weren't common-law or married. You can then take the other person to civil or small claims court if you believe they owe you money.
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Feb 25, 2005
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Toronto
I would highly suggest seeing a lawyer. It's a misconception how easy it is to separate. If one party disagrees, they can litigate and waste time and money. The money spent on an agreement in the beginning is money well spent.
Deal Fanatic
Dec 11, 2008
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I believe in Ontario, Common-law is not the same as Marriage. So your SO won't have access to anything. The only change is if there are now children involved.
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Mar 23, 2008
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Common-law isn't the same as marriage in many cases, but in the case of a property that you're both living in, things get funky when there's shared funds. For example, once someone moves in, they start paying a portion of the household expenses on the property (property tax, improvements, possibly part of the mortgage). At some point, even if the property belonged to one of the partners alone in the beginning, it can be argued that the other partner deserves some of the equity if there was a split.

It's just cleaner all around if there's an agreement in advance. Even more so with common-law, because the rules aren't spelled out like they are for married couples. With married couples, you have a baseline to start with, and you need to have an agreement for exceptions/changes to the baseline. With common-law, there is no baseline (basically).

C
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Sep 23, 2013
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Waterloo, Ontario
I've heard from a lawyer that "what's yours before the relationship would stay the same afterwards" but it'd be nice to get some confirmation. I wish there were some active lawyers in this forum, it's a topic that has peaked my interest.
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Feb 25, 2005
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To be more specific, you need a cohabitational agreement drawn up by your lawyer.
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SteveDfsin wrote:
Jul 12th, 2018 1:13 pm
I've heard from a lawyer that "what's yours before the relationship would stay the same afterwards" but it'd be nice to get some confirmation. I wish there were some active lawyers in this forum, it's a topic that has peaked my interest.
That's a fair comment for something that doesn't take an on-going financial feeding (like furniture, appliances, etc), but it falls apart in the case of significant property.

For example, my GF owns a house that she paid the down payment on. She's the one on title and on the mortgage. I'm not. Yet I have taken on the mortgage payment and utilities, while she pays the property tax and insurance. If we split up in 10 years, and my principal payments have equaled her initial down payment (or exceeded it), I shouldn't have a stake in the equity?

It is a good topic for discussion, though... :)

C
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Sep 23, 2013
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CNeufeld wrote:
Jul 12th, 2018 1:19 pm
That's a fair comment for something that doesn't take an on-going financial feeding (like furniture, appliances, etc), but it falls apart in the case of significant property.

For example, my GF owns a house that she paid the down payment on. She's the one on title and on the mortgage. I'm not. Yet I have taken on the mortgage payment and utilities, while she pays the property tax and insurance. If we split up in 10 years, and my principal payments have equaled her initial down payment (or exceeded it), I shouldn't have a stake in the equity?

It is a good topic for discussion, though... :)

C
Ahh great point, I think that message was conveyed to me as a generality.
Deal Addict
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Aug 3, 2009
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cohabitation agreement is the term. Would be a like $100-300 max from a lawyer.
Deal Expert
Aug 2, 2004
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This is tough, have you discussed this with your significant other?

From my limited understanding, the property remains yours, but the appreciation value maybe shared. If she moves in today and the value is $500,000 and you break up 5 years from now and the appraised value is $800,000, she maybe eligible to claim $150,000

I can't confirm that, but that is my understanding for common law.
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Apr 21, 2014
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SteveDfsin wrote:
Jul 12th, 2018 1:13 pm
I've heard from a lawyer that "what's yours before the relationship would stay the same afterwards" but it'd be nice to get some confirmation. I wish there were some active lawyers in this forum, it's a topic that has peaked my interest.
That’s somewhat correct your equity that you have built into your home before moving in together is yours. But after that, if she is helping to pay the mortgage or other expenses , she should be eligible for her half of the equity going forward.
Newbie
Dec 29, 2014
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Toronto, ON
Consult with an attorney. I believe that many charge around $150 for an hour consultation but in your case, I think it would be worth it.

This topic casually came up a while back when I was out with friends and one of the people there (friend of a friend) is a lawyer and he basically said that prenups are useless. In terms of common law, if this person is your significant other, she may not be entitled to your home if you split up but the judge might rule that she's entitled to a certain amount of money, especially if she ends up paying bills, cleaning, cooking, buying groceries, furniture... etc.

Proceed with caution.
[OP]
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Jan 21, 2017
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CNeufeld wrote:
Jul 12th, 2018 1:19 pm
That's a fair comment for something that doesn't take an on-going financial feeding (like furniture, appliances, etc), but it falls apart in the case of significant property.

For example, my GF owns a house that she paid the down payment on. She's the one on title and on the mortgage. I'm not. Yet I have taken on the mortgage payment and utilities, while she pays the property tax and insurance. If we split up in 10 years, and my principal payments have equaled her initial down payment (or exceeded it), I shouldn't have a stake in the equity?

It is a good topic for discussion, though... :)

C
Perhaps it would just be considered as rent? Like, my roommate is paying me rent that goes towards mortgage etc. It doesn't mean he is entitled to the property? I could be wrong. Not a lawyer
[OP]
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Jan 21, 2017
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Striker60 wrote:
Jul 12th, 2018 10:37 pm
Consult with an attorney. I believe that many charge around $150 for an hour consultation but in your case, I think it would be worth it.

This topic casually came up a while back when I was out with friends and one of the people there (friend of a friend) is a lawyer and he basically said that prenups are useless. In terms of common law, if this person is your significant other, she may not be entitled to your home if you split up but the judge might rule that she's entitled to a certain amount of money, especially if she ends up paying bills, cleaning, cooking, buying groceries, furniture... etc.

Proceed with caution.
OH boy. Ok, will need to talk to a lawyer.

That makes little sense that "buying grocery, paying some bills/rent" ="half of the appreciation of your property".

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