When considering buying a property in Alberta with another person, it’s important to understand that family law questions and concerns can impact the process. For example, if a dispute arises mediation and arbitration are viable options if the right steps are put into place at the beginning. Cohabitation Agreements, Co-Ownership Agreements and Pre-Nuptial Agreements are the main options that should be explored.

When you are buying a house, and you are not married, a Cohabitation Agreement / Co-Ownership Agreement is used to determine how to divide up the financial obligations that come with the property. The financial obligations include the mortgage and maintenance of the property including renovations, property taxes, utilities, internet.

Division Of Assets

When you purchase a home with someone that you’re not married to, it is more difficult to divide up the equity and the debt because there can be unequal contributions by the parties involved. The equity in the property may include the increase / decrease in value of the property. It may also include tenant income, if any, from the property.

When there is not a formula to divide up the equity and the debt, and the purchasers are not able to agree on how to divide the equity and the debt, the parties may have to go to court or go to mediation / arbitration, to resolve the dispute.

When you are married the obligation is an equal split of equity and debt. The equal split of equity and debt is subject to exemptions. Exemptions may include an inheritance, net sale proceeds from property that was owned prior to the marriage and debts like a student loan that exists prior to the marriage. If exempt assets and liabilities are combined with property that is acquired during the marriage, the exemptions may be reduced and / or forfeited.

Arbitration As An Option

When parties are unable to resolve a dispute, parties can agree by consent to appoint a qualified Mediator Arbitrator, who has the skills and experience of a judge, to hear from the parties about the dispute. Their role includes directing the parties to produce the required supporting documentation to resolve the dispute in mediation arbitration. Mediation Arbitration is an alternative to going to court.

Going to court for resolution can be expensive, and due to the current court system being backlogged, resolving a dispute in court could take several years. Appointing a qualified Mediator Arbitrator and participating in Mediation Arbitration could resolve a dispute in a short time frame (3 months). If the parties are not able to resolve the dispute in mediation, by consent, arbitration gives the appointed mediator / arbitrator the power to impose an arbitration decision on the parties. The arbitrated decision includes a cost award to the winner of the arbitration, in the discretion of the arbitrator.

Technically, family law has serious and lasting consequences to buyers and sellers of property. It is important to know all of the rights and obligations you may have prior to or during your ownership. Don’t hesitate to contact us call at 403-245-3500 to discuss all of the options available when you are considering buying a home with friends or family.