If you buy a house as a couple, it may happen that the amount of each spouse’s down payment is not the same. What are the consequences of a divorce or separation?
When purchasing a property, spouses do not always have the same financial flexibility and the down payment can be different for each person. Although this inequality does not seem to be a problem when the marital relationship is in good condition, divorce or separation generally leads to discord. Can the spouses get back the amount originally paid? This depends on several factors.
If the spouses are married or legally united
Nihal Selim, lawyer and legal popularizer at Éducaloi, mentions that the regulation of the division of family assets applies to married or civil couples. “This means that the entire net value of assets accumulated during the marriage that is used for the needs of the family is divided in half between the spouses,” she explains.
Among the assets included in the inheritance we find in particular all residential buildings that were used for the family’s own needs (family house, chalet, condominium, etc.). The regulation applies regardless of whether both spouses are co-owners or just one of them.
Therefore, the fact that the down payments were different at the time of purchase makes no difference and at the time of divorce the equity is divided equally between the spouses.
“Be careful,” says Nihal Selim, “because this rule serves public order.” This means that you cannot waive it from the outset, for example by noting in the notarized purchase deed that in the event of a possible divorce, each person would receive the amount of their deposit back. » However, she adds that in practice, ex-spouses can agree on a different division.
For example, you could decide that the division will be in proportion to what each person paid for the down payment, or that the spouses will take back their respective down payment so that it is fair.
Important clarification: For example, if the down payment was made with money received as a gift from your parents or if it comes from an inheritance, it is possible to exclude the amount from the division of family assets. However, you must be able to prove the origin of this sum.
For life partners
For common law partners, the family inheritance rule does not apply and technically everyone can get their assets back. “If they purchased the family home together, the spouses are co-owners. The fact that a different deposit was paid has no real impact,” says Nihal Selim.
However, in order to avoid any problems in the event of a separation, it is possible to note this in the notarized purchase contract. This clause may stipulate that the spouses will receive back the amount paid for their respective down payment or that the net worth will be divided in proportion to that amount.
For example, if one spouse contributed $75,000 and the other contributed $25,000 for a total down payment of $100,000, the applicable share at the time of division would be 75% and 25%, respectively.
ADVICE :
· Would you like to buy a property with your partner? Contact a lawyer or notary to fully understand the situation and receive advice tailored to your situation.
· To learn more about the legal implications of a divorce or separation, consult the section on separation of married couples and separation of domestic partners on the Éducaloi website (educaloi.qc.ca).