Expert: Cinzia Dalgarno - 7/28/2009

Question
My question is in regards to ownership entitlements and obligations when two people are co-applicants in a mortgage.
My girlfriend and I decided to move in together in June 2007 so we are legally common-law partners now. I decided to bought a property and although I got pre-approved for an amount above the selling price of the property, the mortgage broker told me the bank did not approved the mortgage and persuaded me to ask my girlfriend to co-sign the loan. The bank approved the co-application but my girlfriend did not want to accept 50% entitlement when we got to the lawyers office. So the lawyers left it 99% for me and 1% for her. We decided to rent the property so we have never lived in it as common-law partners and we bought the property in April 2009 when we were not yet legally common-law partners. Now we are splitting in amicable terms but I am worry that in the future she will hire a lawyer and force me to sell the property. If she ever do that, what would be the entitlement percentage that correspond me to pay her if I have to sell the property

Answer
Hello Christan. Your situation is complicated legally.
Firstly, if you were pre-approved for a mortgage, I fail to understand why the bank would suddenly not approve the mortgage, and then approve it with your girlfriend added - a pre-approval is an approval of the covenant (the person(s) borrowing the money)...and is subject only to the bank's satisfaction that the property is acceptable.
This is irrelevant now, of course, but something to think about next time you go to a mortgage broker. It sounds as if they perhaps did not get you a preapproval, and then were scrambling to get the mortgage approved, once you found a property. Or, alternatively, you were preapproved and then your financial situation changed drastically?
At any rate, on to your situation currently:
The fact that your girlfriend did not want to go on title except for 1% seems odd, but again, in my opinion, irrelevant right now.
Family law is different depending on the province you live in; I strongly recommend you go see a lawyer. The money spent will be well worth it in the end, as thousands of dollars are involved. Not only do you need to clarify the ownership and entitlement regarding the rental condo, but you should seek advice regarding drawing up a legal separation agreement - which, by the way, you can do without benefit of a lawyer, although it may not stand up in court, if it doesn't adhere to the family laws in your province.
So really, the most important thing I can say in answer to your question, is go see a lawyer. Tell them your situation. They will advise you as to what your next steps need to be.
Warm regards,