I’ve had two separate but related experiences lately that caused me to shake my head. Then again, this is Ontario, and after 40 years in real estate I should probably have learned that very little should surprise me.

Before I go any further, let me make something perfectly clear: I am not a lawyer. I don’t play one on television, there is no law degree hiding behind my real estate licence, and this article is not intended to provide legal advice.

What I am sharing are two real-life situations I was involved in as a Realtor and watched unfold while lawyers represented the people involved. I found them fascinating because they demonstrate how differently property can be treated when a relationship ends depending upon whether a couple is married or living common-law.

And there were a few surprises.

Two relationships. Two houses. Two very different outcomes.

The first involved a couple who had lived together and eventually decided to get married. A few months after the marriage, the husband’s father passed away and left his home to his son. The property was transferred into the son’s name alone.

About five years later, the marriage ended and the property had to be sold. The husband initially believed that because he had inherited the home and title was solely in his name, the equity would remain his.

The legal advice he received was quite different.

Because the property had become their matrimonial home, he was advised that Ontario’s matrimonial-property rules applied. That came as quite a shock to him. Generally, gifts and inheritances received by one spouse during a marriage can receive special treatment when property is divided, but the matrimonial home is an important exception. If an inherited property becomes the family’s matrimonial home, very different rules can apply.

That wasn’t even the part that surprised me most.

Although the husband was the registered owner of the property, his wife had matrimonial rights relating to the home. When an Agreement of Purchase and Sale was accepted, her consent was required as part of allowing the property to be sold.

What happened next was something I had never encountered before.

Her agreement to cooperate with the sale became leverage in the negotiations between them. At one point, she indicated that she was prepared to allow the property to fall back into the hands of the lender rather than cooperate unless her financial demands were addressed.

Suddenly we weren’t simply dealing with price, conditions, financing and closing dates. There was an entirely different negotiation taking place behind the scenes.

Ultimately, the home sold and the lawyers dealt with the division of the financial interests between the spouses according to the circumstances and the applicable law.

Now change one thing: they weren’t married.

The second situation involved a common-law couple who had been together for approximately 15 years. They lived together in the same home throughout that period, but title to the property was in the man’s name alone.

When their relationship ended, the woman sought legal advice. She had contributed toward household expenses and the costs of running the home throughout their relationship and believed that, after 15 years together, she would have an automatic entitlement to some of its equity.

She was advised that common-law relationships are treated very differently from marriages when it comes to property division.

In Ontario, common-law partners do not automatically participate in the same equalization of property that applies when a marriage ends. Generally, property remains with the person who owns it.

That does not necessarily mean a common-law partner can never make a claim relating to a property owned by the other person. Depending upon the facts, there may be other legal arguments available. But those are very different from the automatic property-equalization system that applies to married couples, and pursuing them can mean lawyers, evidence, negotiation and potentially litigation.

After watching these two situations unfold, the contrast struck me.

In the first, a person inherited a home and held title in his name alone, yet marriage and the matrimonial-home rules created significant rights for his spouse.

In the second, two people lived together for 15 years, yet simply living in the property and contributing toward household expenses did not automatically create the same property rights that marriage would have created.

Agree with the rules or disagree with them, the important point is understanding that married and common-law are not interchangeable terms when it comes to property in Ontario.

The conversation nobody wants to have

There is another lesson here, and it has very little to do with romance.

People spend enormous amounts of time discussing where they will live, whether they want children, how they will combine their lives and whose awful sofa is finally going to Goodwill.

Far fewer discuss what happens financially if the relationship ends.

It isn’t particularly romantic dinner conversation, but neither is sitting in a lawyer’s office five, ten or twenty years later saying, “I had no idea that’s how this worked.”

For couples getting married, a properly prepared domestic contract or marriage contract can address how certain assets will be treated if the relationship ends. Common-law couples can also use cohabitation agreements to establish expectations and responsibilities while everyone still likes each other enough to be reasonable.

That last part is rather important.

Planning for the possibility that a relationship could end does not mean you expect it to fail any more than preparing a will means you are planning to die next Thursday. It is simply future planning.

And when significant real estate, inheritances or other assets are involved, understanding the rules before there is a problem makes considerably more sense than discovering them afterward.

One last time: I am not a lawyer.

These are examples from situations I personally encountered in real estate. They should not be taken as legal advice, and individual circumstances can dramatically change the legal outcome.

If you are getting married, entering a common-law relationship, receiving an inheritance, buying a home together or separating from a partner, speak with a lawyer and find out exactly how the law applies to your circumstances.

My real estate advice, however, is another matter entirely.

If you are considering buying, selling or investing in residential real estate, that is something I’ve spent the past 40 years doing.

I can be reached at lindsay@buyselllove.ca or 905-743-5555.