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Formalize joint property purchases to avoid future conflict

It's not "unromantic" to establish terms and conditions for the acquisition of property that a couple purchases jointly, Toronto family lawyer Jennifer Samara Shuber tells AdvocateDaily.com.

"Visit a lawyer, set out the terms of the purchase, and that will eliminate any problems should the relationship end," says Shuber, a lawyer with Beard Winter LLP.

She says people are often wary of marriage contracts and cohabitation agreements because it takes the romance out of it.

“But you're entering into a financial transaction — you're purchasing a property with your partner. You know how much each person is putting in, so what is the problem with preparing a contract that details what will happen in the event you are no longer together?" Shuber says.

"Presumably, there have already been discussions of money and title, so it's not like you're creating a new conversation that's going to cause angst,” she adds.

In a recent Ontario Superior Court of Justice matter, a couple purchased a rundown property with the goal of renovating it to sell for a profit.

The husband provided 90 per cent of the down payment, and the wife contributed the remainder, but when they separated she sought half of the proceeds from the sale of the renovated property.

Shuber, who was not involved in the matter and comments generally, says had they spelled out formal title as tenants in common — proportionately based on their contributions — there wouldn't have been this problem.

"You don't want to have to litigate for the difference in value," she says.

The court found each spouse contributed the same effort in improving the home, but that the contributions to the initial price weren’t equal, and there needed to be some reallocation of funds.

It awarded the husband $56,000 from the increased value of the home after renovations, while the wife received $7,000.

"You can bet they spent far more money litigating this matter,” Shuber says. “In a cost-benefit analysis, they both lose — time, energy, emotion and money."

It can be avoided by getting a contract drawn up which sets out what the parties' expectations are, she says.

"Instead of litigating, take title that clearly reflects what each party’s contributions are."

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