Co-Signing Nightmares — Why You Need Independent Legal Advice

When a GTA common-law couple broke up, she withdrew $157,000 from their joint credit line. Independent legal advice could have averted the drama that played out in Ontario Superior Court of Justice. It’s why getting a second opinion from your own lawyer is so valuable.

Who Owns Money in Joint Bank Accounts

A move across country from Alberta to Ontario was the start of the couple’s problems. Two years and two houses later, they were no longer an item. She had most of the proceeds of their credit line in the mistaken belief it was her 50/50 share of their joint real estate holdings. He had a date with family court.

Getting Bridge Financing for a New Home

The couple began their life together in his Calgary home. With the move afoot, he listed the home for sale. Their first stumbling block came applying for a mortgage loan for their new home an hour from Toronto. Bridge financing to tide them over until the Calgary home sold was refused — his income was just too low. At the bank’s urging, the couple agreed she would co-sign for a new mortgage and joint line of credit.

Being a Joint Property Owner

Co-signing was one thing. But the bank also wanted her on the property title as joint owner. She consented. All that was left was to sign an agreement of purchase and sale and register the property title. The new house cost $330,000. The bank advanced $246,000 on a line of credit and the couple borrowed $84,000. 

New Common-Law Relationship, New Home

Eighteen months into her common-law relationship, the wife had a mortgage, credit line and new home. She moved into the GTA residence as a joint tenant. Her spouse stayed in Calgary to await the sale of his home. We’ll never know if she thought of getting independent legal advice before co-signing for the legally binding mortgage documents and credit line.

Bridging the Gap Between Home Purchase and Sale

Five months later, her spouse closed the real estate deal on his Calgary home. The $326,000 profit paid off $200,000 on the GTA line of credit and the bridge financing. That left $47,000 owing on the couple’s joint mortgage. 

Marital Breakdown Causes Grief

Things were going along swimmingly, one would think. Except, they weren’t. Three months in, an argument escalated. The wife’s heart was “changed for good”, she told the court, when her spouse was unkind to her dog. Three more months went by as she consulted lawyers and real estate agents. By mid-December, their relationship was over.

Was Reason for Taking Money Justified?

Her spouse became withdrawn, stressed and unhappy, he testified. The pressure was about to go up. A draft separation agreement she left behind could have said it all. But along with her suitcases, his wife took $157,000 from their joint credit line. Her explanation went like this: she’d take the cash, he’d be responsible for the $230,000 credit line and she’d sign over her interest in their GTA home. The Dear John note read: “As far as me taking my entitlement, I had to. I can’t live with nothing.” As she told the court, she was afraid of his abusive, controlling nature and had nowhere to go. But was her reasoning legally sound?

Abuse Complaint Dismissed

The judge didn’t think so. He dismissed the complaint about her spouse’s behaviour — she had never phoned police or been struck in anger. He doubted she would have left Calgary if she feared her common-law husband. Then there was the money. “Cleaning out” the line of credit as a condition for separating wasn’t justified, he said.

Non-marriage Affects Wife’s Legal Position


Unmarried domestic partners can only get more than they brought into a relationship if they can successfully argue their partner was unjustly enriched by living common law. To recover the credit line proceeds, the husband had to prove:

  1. His wife was enriched by taking the money.
  2. That was unjust because it deprived him.
  3. And there was no reason (in law or justice) for her to keep it.

While she might have made a case for unjust enrichment herself if she gave up paid work to keep the house, there was no evidence the wife had done so.

When Spouse Pays for Matrimonial Home

The money to buy the GTA home was borrowed and paid back by the husband selling his Calgary home. With the mortgage and property title in both names, she was owed a beneficial share if the GTA home was sold. But her arguments that her share was a gift and she had contributed to the value of the Calgary home fell flat. 

No Shared Wealth in Short-lived Relationship

Realistically, the judge said, the relationship was short-lived. While the couple shared day-to-day expenses and occasionally helped each other with credit card debts, they had not pooled their joint wealth. The couple had kept their assets, savings and investments mostly separate

Wife’s Contributions a Share of Home’s Value

On the other hand, the wife did pay rent in Calgary, saved her husband money by doing the real estate paperwork to sell the home and assumed a risk by co-signing for the GTA home and going on the property title. The judge valued these contributions at $43,000 or 13% of their new home’s value. 

Resolving a Common-law Dispute

Since the amount she took far exceeded 13%, the court required her to return it, pay nearly $17,000 in interest and go through proper legal channels to get her share. Four years after their breakup, the couple was still involved. It makes the argument for Independent legal advice. 

Independent Legal Advice for Common-law Breakups

Ask Axess Law Ontario for an independent legal opinion before your common-law dispute winds up in court. Video conference online with a licensed family law lawyer 7 days a week, day or evening. Dial toll-free to 1-877-522-9377 or in Greater Toronto at 647-479-0118 or use our online booking form to make an appointment. In person meetings can be arranged at our Ottawa, Toronto, Scarborough, Vaughan, Etobicoke, Mississauga Winston Churchill or Mississauga Heartland law offices.

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