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Today we're going to look at the following situation: you've been in a relationship for two years and you live in a house that your partner or partner bought before you met. You have not entered into a marriage, but you are thinking about becoming a co-owner of the home. Would this be a favourable and sensible decision?
This situation is far from unique, and many couples are in the same position.
It is important to have an open and honest discussion about all financial, legal, tax and emotional aspects before deciding to co-own the home. This will allow you to agree on the proportion that each would like to own. The ratio doesn't necessarily have to be 50x50, you can agree on any option that suits you: 40% to 60%, 30% to 70%, etc.
✔︎ Estimate the value of the property
The first step is to call an appraiser to determine the market value of the property owned by one of the partners. This will figure out how much you have to pay her or him to become a co-owner.
For example: the market value of the house is $400,000 and you have $250,000 left to pay on the mortgage. 400 000 - 250 000 = 150 000. Therefore, the net value of the property is $150,000.
If you plan to own the home in equal shares, you will need to pay half of the net worth, which is $75,000.
✔︎ Go to a notary and a bank.
After the appraisal, you will need to ask the financial institution that issued the original loan to list your partner as a co-borrower. Next, you should contact a notary who will prepare a deed of co-ownership of the property, entering your partner's name on the title deed.
Obligations to keep in mind
Notary fees: legal fees and the cost of amending the title deed.
Debt sharing: as a co-owner, you will also be responsible for a portion of the existing or new mortgage, as well as any future debts associated with the property. Even if the percentages are different on paper, in the eyes of the bank, the loan remains indivisible and joint. This means that if one person defaults, the other remains responsible for the entire debt.Consequences in the event of separation: property division and debt settlement can become complicated and require court intervention.
