Your adult child wants to buy their first home and you helped them with the down payment. If he is in a relationship, how can this amount be secured in the event of a breakup?
With housing prices skyrocketing and mortgage rates rising, home ownership is becoming increasingly difficult, especially for young people buying their first home. To give their adult child a boost, many parents will support the down payment if they can. If this is the case for you and your offspring is in a relationship, you may be wondering what happens to the money you pay in the event of a breakup. Nihal Selim, lawyer and right-wing popularist at Éducaloi, points out that the situation differs depending on the situation, depending on whether the spouses are married or not.
For married couples
“If the couple is married, the rule of division of family inheritance applies. This means that the value of certain goods used for family needs is shared in half,” she explains. This even applies to property belonging to only one spouse.
The assets that will be inherited include, in particular, the family home and the furniture it contains, the vehicles used by the family, the chalet, etc.
However, since it is equity, the debt associated with the property must be deducted, such as the balance of the mortgage on the home. “In addition, if one of the spouses used a gift amount to purchase the residence, this amount must also be deducted to calculate the net worth,” specifies Nihal Selim. Then this value is divided between the ex-spouses.
For example, if you gave your child $50,000 for their down payment and the value of the family home is $500,000 with a $250,000 mortgage balance, the amount to be split is $200,000 ($500,000 – $50,000 Dollar gift from parents – $250,000 mortgage balance). ).
Be careful though, you must be able to prove that it is in fact a gift and that it was used for the deposit, otherwise the amount will be included in the value and shared.
“The best thing to do is to include this information in the notarial deed when you buy the property,” recommends the lawyer. For example, the amount of $50,000 is a gift that benefited only one of the spouses and was used for the down payment. “The notary can provide buyers with well-founded advice and support on this subject,” says Nihal Selim.
For actual spouses
If the couple is not married, the rule of division of family inheritance does not apply. But caution is also required here and the lawyer recommends including this clarification in the notarial deed. Or it could be mentioned that in case of separation, the profit from the sale of the property will be shared, taking into account the financial contribution of each spouse.
Nihal Selim adds that it is also possible to specify and specify in a cohabitation contract the consequences in the event of separation. De facto spouses therefore have an interest in creating one for their own protection, as they do not have the same rights and obligations as married or registered couples.
ADVICE:
- In order to avoid a legal dispute, you should plan ahead and inform the notarial deed of a possible gift of money when you buy the house. Even in the event of a dispute, this act would be excellent evidence if the case were to end up in court.
- If you prefer to lend the money to your child and they are married, that loan will be considered a debt and will therefore be deducted from the value of the property. For de facto spouses, on the other hand, it is ideal to mention the existence of this loan in a cohabitation agreement or in the notarized deed of sale.
- To learn more about the legal ramifications of a divorce or separation, consult the sections on the separation of married couples and the separation of de facto spouses on the Éducaloi website (educaloi.qc.ca).
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