The client
A common-law couple in Tillsonburg separated after several years together, holding their $460,000 home as joint tenants with a $210,000 mortgage balance remaining.
Home value
$460,000, Tillsonburg
Held as joint tenants
Existing mortgage balance
$210,000
Departing partner's traced share
30% of equity
Confirmed by resulting trust, not assumed
Keeping partner's income
$6,800/month
Qualifying solo
The problem
A married couple separating in Ontario divides their home under Part I of the Family Law Act -- net family property equalization, a formula that runs regardless of whose name is on title. This couple assumed the same math applied to them. It never did.
Why there was no formula to use
- ▸Family Law Act Part I equalization is defined by reference to married or formerly married spouses; an unmarried couple, however long they lived together, has no equalization right under it at all
- ▸Their joint tenancy gave each partner an equal LEGAL interest in the property -- but legal title says nothing about their actual BENEFICIAL share once who paid for what is examined
- ▸Without a formula, the only way to set a fair number was to trace their real financial contributions since the purchase
Both partners had been quietly assuming a 50/50 split. Neither of them had ever had a right to one.
The numbers
Once the couple's family lawyer confirmed the actual, traceable contribution split, pricing the buyout and structuring the keeping partner's solo refinance around it was straightforward.
| Pricing the buyout by traced contribution, not assumption | Amount |
|---|---|
| Home equity | $250,000 |
| Departing partner's traced share (30%) | $75,000 |
| New solo mortgage balance | $285,000 |
| Buyout basis | Figure |
|---|---|
| A flat 50/50 assumption | $125,000 |
| The actual, traced 30% contribution share | $75,000 |
| Difference avoided | $50,000 |
The gap was never about disagreement -- it was about which number either partner was actually entitled to ask for. On the keeping partner's own $6,800/month income, the new $285,000 balance qualifies at 38.5% total debt service, comfortably inside range for an uninsured refinance, consistent with the payment levels average mortgage payment data shows across Canada.
The solution
A mortgage agent licensed under Ontario's Mortgage Brokerages, Lenders and Administrators Act treated the buyout number as a legal question to be answered first, not a ratio to be solved second.
First, confirmed with the couple's own family lawyer that no Family Law Act equalization right existed for them at all. Part I's protections, built around the language of marriage, simply had nothing to say about this couple's separation.
Second, had the lawyer trace each partner's actual financial contribution since the purchase -- down payment, mortgage payments, major repairs -- to establish the departing partner's real, provable beneficial share under the common law of resulting trust.
Third, structured the keeping partner's solo refinance around the traced 30% figure, not the 50/50 number either partner might have assumed going in.
The outcome
The refinance funded at 4.85% for a new $285,000 balance, with total debt service on the keeping partner's income alone at 38.5%.
Because this file is uninsured, CMHC's ratio maximums do not apply directly; the 38.5% figure is informational. The 30% traced share -- not a mortgage calculation -- is what actually set the buyout.
What to take from this file
- 01Family Law Act Part I equalization only ever applies to married or formerly married spouses. A common-law couple, however long together, has no equalization right under it -- do not assume the same 50/50 math applies.
- 02Joint tenancy's equal legal title is not the same as an equal beneficial interest. Common-law property division runs on resulting-trust tracing of actual contributions, a materially different exercise from a family-law formula.
- 03This is a family lawyer's determination, not a mortgage professional's. Confirm the buyout number is settled before structuring the refinance around it, not the other way around.
- 04A flat 50/50 assumption can badly overstate what an unmarried co-owner is actually entitled to. Ask early whether a couple is common-law, and never default to equalization math by habit.
Sources
Every regulatory figure in this file traces to one of these primary sources. Client details and anything that varies by lender are illustrative, as flagged below.
- ▸OSFI — Minimum qualifying rate for uninsured mortgages — the minimum qualifying rate — greater of contract rate + 2% or 5.25%.
- ▸Provincial/territorial mortgage-broker legislation fetched directly (bclaws.gov.bc.ca, legisquebec.gouv.qc.ca, fcaa.gov.sk.ca, web2.gov.mb.ca, nslegislature.ca, assembly.nl.ca) plus FCNB's own site for NB and CanLII's index for PE — see notes for per-province method — provincial mortgage regulators and licence titles.
Illustrative in this file — lender-specific, not rules:
- ▸4.85% contract rate — rates move daily; not a quote.
- ▸the 30% traced contribution share — every resulting-trust tracing turns on that couple's own records; there is no formula -- a family lawyer confirms the figure, not a mortgage professional.
- ▸the TDS figure — this is an uninsured buyout refinance, so there is no CMHC ratio ceiling -- the number is informational.
Authority & provenance
How this case file was built
We publish the origin, the verification method and the reviewer for every case file, so you can judge how far to trust it before you rely on it with a client.
Where it comes from
Derived from files handled by Treadstone’s fulfillment desk and from scenarios contributed by partner brokerages. Names, employers, exact amounts and dates are changed so no client or file is identifiable.
Provenance: Composite — a pattern seen repeatedly on fulfilled files, not a single transaction.
What is verified
Every regulatory figure traces to a primary source listed above and was checked against it on the date shown. The arithmetic is recomputed by machine on every rebuild.
Anything that varies by lender is labelled illustrative rather than stated as a rule.
Who reviewed it
Reviewed for Canadian regulatory accuracy before publication, and re-checked whenever a cited rule changes.
Reviewed by: Nicholas Parson, Treadstone Associates — reviews every case file before publication.
This case file is professional reference material for licensed mortgage professionals. It is not advice to a borrower, and it is not a lender commitment. Insurer rules, qualifying rates and provincial taxes change — confirm the current position with the insurer, regulator or lender before you rely on any figure here in a live file.