If you are cohabiting with your common-law partner, you may have wondered what would happen if you both separate in the future.
Well, you are not alone. Many couples in a relationship or about to enter a new common-law relationship have this apprehension when they want to safeguard their assets from the impact of any future separation.
What Happens in a Common Law Separation?
So, if you are paying down most of the mortgage on your house, you may wonder whether your common law spouse has a share in the house. The answer to that depends on a variety of factors.
If the house was purchased jointly, that is both yourself and your common law spouse were placed on the title, then the house would be divided equally irrespective of how much each partner shared in making the mortgage payments. The common law spouse’s behaviour or lack of sharing in the mortgage payments will have no bearing whatsoever on his/her ownership of half the property. The value a spouse has in the property also does not freeze as of date of separation, but continues until date of eventual sale of the property even if they left the property post-separation and did not contribute towards any of its expenses since. In this case however, the spouse that carried the mortgage expenses and/or occupied the property can ask for their payments to be taken into account upon eventual sale. Either spouse can at any time request the court to have the house sold. Neither spouse has the right to exclude the other from the property absence a restraining order or a court order for exclusive possession.
If the house was purchased by one prior to the common-law spouse moving in, or was purchased together but only placed in one spouse’s name, then absent a trust claim by the non-owner common law spouse, he/she will have no claim to that property. The right of equalization is not present with common law spouses in Ontario regardless of the length or the relationship or cohabitation. Neither is a right to occupy the home if the owner demands it to be vacated. No matrimonial home designation can be made on the title of the property. A trust claim is difficult to make, and requires a court application. Owning spouse is free to do as he/she pleases with the property absent a court order or court ordered Lien against the property. To successfully establish a trust claim there has to be a clear record of payments made by the non-owning spouse towards the property’s down payment, mortgage payments and/or repair work to increase the value of the property along with the fact that as a result the owning spouse has been unjustly enriched.
In short, in the event of a separation, common law partners are entitled to 100% of their properties and assets. Sharing of the assets is done only for jointly owned properties. The common law spouses do not have automatic property rights over the spouse’s property like married couples. They possess rights over the spouse’s properties only if the property title has been legally transferred to them by giving, inheritance or other voluntary transfers.
Is there any exception to the common law rules for the sharing of property?
The concept of unjust enrichment is an exception to the common-law property division rules. Also known as constructive trust, this is the remedy for all situations where unjust enrichment has been done.
Under this claim, a common law spouse can claim for return of the benefit arising from their contribution to the other spouse’s property. This contribution can be by doing a renovation, working on the land or paying down the mortgage.
The defendant should have had a benefit to the plaintiff’s disadvantage without the existence of any reason to benefit legally. The labour done for the property or using the property must not have been compensated by way of rent or any other similar payment.
This claim and remedy are applicable to common law spouses and other persons not in common law relationships. So, unjust enrichment can arise in cases where a person helped his/her neighbours by building their house.
Are there other approaches to deal with common law asset divisions?
There are other approaches as well for spouses dealing with separation in their common law relationships. A Joint Family Venture is a concept where property rights present in the common law relationship are sought to be made equivalent to the rights present in a marriage.
As identified by the Court, the Joint Family Venture has very similar traits if compared to net family property equalization. Though this is a good approach, it can be challenging to implement as the separation date is not as clear as in case of a marriage.
What Are the Things to Note in a Common Law Split?
If common law couples turn to litigation, their property will most likely be equally divided if they jointly own real estate and other assets. Staking claim to one’s own property will not result in a legal dispute when the relationship ends.
How are the assets divided if a married couple separates?
If a married couple splits, their property rights are governed differently. In death and separation cases, a spouse can request the court for net family property equalization. In such cases, the spouses each get half of the growth in the value of their assets from the date of the marriage to the valuation. The date of valuation can be either the date of the spouse’s death or date of separation. The opportunity to equalize can be opted for by a spouse if the spouse is being treated less favorably by the deceased spouse’s estate.
How We Can Help
At Nanda & Associate Lawyers, our excellent Family Law lawyers take the time to understand your specific circumstances and provide tailored and customized solutions. Many legal complexities exist in navigating cohabitation agreements and an experienced Family Law lawyer can help you to navigate better.
Our Mississauga Family Law Lawyers are available for a no-obligation free consultation. Come and experience our quality legal counsel and personalized care we provide to each of our clients. We ensure prompt communication and a caring approach to get the best outcomes for you and your family.
