Living together but financially absolutely separate? (Canada)

January 13, 2016 1:06 PM

I was wondering if anyone has any advice to impart about managing finances on an absolutely separate basis as a live-in couple. Specifically, if one person wants to pay for the mortgage with no financial help from his partner.

As a Canadian person, not even legally common-law yet but on the way there, is this do-able, both from a practical perspective as well as a relationship one? I have heard that it's not a great idea to pay your partner 'rent' if you are aware of wanting to make your own investments etc. Is it then a good idea for the other person to make his own investments in other real estate (cottage or income property), stocks, etc.?

If it helps, the background to this is that it involves someone who has been through a couple of difficult breakups in which splitting assets became difficult, practically and emotionally - hence the desire to keep things separate. This is not about this person being cheap - he would actually be totally OK supporting a partner who was not engaged in waged work, so I am not really looking for feedback that suggests that the person should be under scrutiny for what he wants. This really just seems to be about what happens in the event of a break up.

If you were considering living with someone who wanted to have total financial responsibility for the mortgage (with the idea that he would keep the house in the event of a break up), what would you want to know and what would you expect? Please assume a comfortable current level of financial security for the non-mortgage payer (in fact an income greater than the mortgage payer), though not as much security so far when it comes to retirement planning, and no current children. You are not a lawyer or financial advisor with respect to this question. Thanks!

posted by analog to Work & Money (14 answers total)

This seems like something that they really, really should talk to a lawyer about. I'm thinking that some kind of legal agreement like a prenup or potentially just a lease agreement that clearly delineates who owns the real estate would be in order. Knowing exactly what kind of documentation they would need and how to nail down the details is exactly what an attorney is for.
posted by goggie at 1:16 PM on January 13, 2016

I actually signed a lease and pay rent to my gf, who owns the house we live in. We're getting married this year, and that's going to complicate things (we plan to meet both a lawyer and an accountant to sort it) but in the immediate term, that works fine, and if we had broken up, I could have walked away without anything messy to sort out financially.
posted by restless_nomad at 1:17 PM on January 13, 2016 [3 favorites]

Best answer: From an emotional standpoint, I'd want to be sure that my partner wouldn't hold my not paying rent over my head during arguments. And some people would not feel comfortable not contributing something to the cost of the household because they want to feel like they're living as an adult rather than being someone else's kept SO.

I don't know about Canadian law, but in the US, living there would create a de facto lease in most places. Even if it's a rent of $0, I'd prefer to have a formal written agreement rather than what the law provides in case things go south.
posted by Candleman at 1:23 PM on January 13, 2016 [3 favorites]

If you actually do get married, it is not possible to do this. We were specifically briefed on this, twice, when each of us came into a modest inheritance. If you get married, there is something called the 'marital home' which is a joint asset, no matter who pays. We were told that our previous money, and inherited money, could remain completely separate UNLESS it was used to buy a house. If it was, and we separated, the marital house would have to be split as a joint asset.

As far as non-married people, you can split the bills however you want to. For instance, we have each always paid our own cellphone bills. He has never paid for mine, nor I for his. People split the bills all sorts of ways :-)
posted by JoannaC at 1:23 PM on January 13, 2016 [1 favorite]

Best answer: Establishing tenancy would be high on my list. With no lease, rent or mortgage contribution, I would look into what my city and state/province considered as evidence that I live in the house. This is not just to guard against being thrown out with no notice, but also for situations where my partner was out of town, in the hospital or dead and I needed to prove my right to occupy the property.
posted by soelo at 1:25 PM on January 13, 2016 [3 favorites]

Best answer: Co-habitation agreement. Every province is different, too, as far as common-law relationships go so you need to speak to a lawyer. Have a look at this. Or this. Or this.
posted by ThatCanadianGirl at 1:40 PM on January 13, 2016 [4 favorites]

I would want to figure out maintenance issues. Is the homeowner responsible for all maintenance? If yes, how will you handle the issue of increased wear and tear from a second occupant? Sounds petty, but, a door being opened and shut 2x as much is going to wear out 2x as fast -- obviously a furnace is going to do the same amount of furnacing, though, so... Anyway, complex, and something to think about. If the tenant engages in chores that contribute towards the equity, then what? Who's responsible for stuff like painting?
posted by kmennie at 2:10 PM on January 13, 2016

I am not a Canadian person (American here) but my boyfriend and I live together and have completely separate finances. At this point, we rent, but we've talked about buying a place at some point. He has a foreclosure in his past and has said that he never wants to own again, and we've always said that if we bought and it was just in my name, he'd pay me rent, same as with any other roommate. Rent would be just that, rent, and the landlord (me) would cover the mortgage and any home repairs. I think as long as you work out some kind of agreement ahead of time, there's nothing weird or wrong with operating this way. It actually seems really smart to me to not get something like a mortgage all tangled up if you're not married and not planning to get married.

Also, owning a home is not really an investment, so both partners should be putting something into retirement vehicles besides the house, whether those are other real estate investments or stocks or whatever.
posted by jabes at 2:44 PM on January 13, 2016

Also not-Canadian (so can't speak to the common-law part). My boyfriend and I came up with a rent that was fair to us: it included things like half the mortgage and utilities, but was also lower than market rate. The agreement was that it was rent, and therefore belonged to the homeowner to do what they wanted with. The homeowner then saved most of it, using it largely on shared or home expenses, with the remainder being invested in a retirement account. Now that we're getting married, those retirement savings (and the home) will be shared, and we both feel good about the financials both before and after marriage.
posted by ldthomps at 3:05 PM on January 13, 2016 [1 favorite]

I'm going to second a co-habitation agreement. They are flexible, (relatively) inexpensive, and would protect both of you legally.
posted by Gin and Comics at 4:03 PM on January 13, 2016 [1 favorite]

Best answer: I am Canadian. My partner moved into the home I own. I have a co-habitation agreement. The co-habitation agreement outlines what would happen financially should we split and includes a required notice period. Co-hab agreements are written by family lawyers all the time.
posted by TORunner at 4:25 PM on January 13, 2016 [2 favorites]

I'll add that you should each have independent legal counsel review the document. And we have wills so that no one ends up homeless should one of us get hit by a bus.
posted by TORunner at 4:44 PM on January 13, 2016 [1 favorite]

Non-Canadian here (USA-American), but I live with my boyfriend and he pays the mortgage and we have separate finances (insofar as we never merged bank accounts or investments--we do think of money as "our money" when we discuss large purchases, etc). He pays the mortgage, and I pay for living expenses. We have a budget for our monthly living expenses, and it's about what I'd pay in rent if I were living alone. This is not an equal divide, but he makes more money than I do, and the arrangement works really well for us.

We never consulted a lawyer about this, because I don't feel we have anything to lose should we break up and I move out (he owned the apartment for 10 years before I moved into it, so I would move out)--I would just go rent an apartment like I did before I lived with him. (I also don't feel we will break up, so it's not something I worry about a lot).

Insofar as me not being "invested" in the apartment--I couldn't afford to be invested in NYC real estate regardless, so there's no loss in me living with someone who owns the apartment. So maybe it's not the same situation.
posted by millipede at 7:05 AM on January 14, 2016

My wife and I have completely separate accounts. I pay for the mortgage and utilities. She pays for almost everything else (groceries, cell phone, cable, etc.). It's strange because when we got married we never considered a joint account. I have to say that it has worked out great. We have never fought about money or purchases. We always discuss major purchases (anything over $200.00) but the majority of the time it is a non-issue.

My wife is an attorney and she did not feel the need to draw up an agreement. That may be naive, but if we were to divorce, we both understand that we would split everything equally. We do have separate wills in case something happens, and in that event the other spouse retains ownership of everything.
posted by Benway at 8:36 AM on January 14, 2016