Common-Law Property Division in Canada: What You Need to Know
When it comes to property division in Canada, there are two different types of couples: those who are married and those who are common-law partners. For married couples, the rules are pretty clear: any property that you acquired during the marriage is considered to be jointly owned, and will be divided equally between the two of you in the event of a divorce. For common-law partners, however, the rules are not so widely known.
Here are things you need to know about common-law property division in Canada:
What are Common-Law Couples?
To be considered common-law partners in Canada, you and your partner must have lived together in a conjugal relationship for at least one year. This means that you must have been living together in a committed relationship, as opposed to just being roommates. It is important to note that common-law couples do not need to be married to be considered common-law partners.
How is Property Divided Between Common-Law Couples?
Common law couples are not legally required to split property acquired when they lived together.
Furniture, household items and other property belong to the person who bought them. Common law couples do not have the right to split an increase in value of the property they brought with them to the relationship. If you contributed to property your spouse owns, you may have a right to part of it. Unless your spouse agrees to pay you back, you may have to go to court to get back your contribution.
Although there is no requirement to divide property on separation, common law spouses may choose to enter into a domestic contract such as a cohabitation agreement or separation agreement that sets out their respective rights to property.
Exceptions to the Rules for Common-Law Property Division
There are exceptions to the basic rules for dividing property between common-law spouses:
Joint Family Venture
A joint family venture is a relationship in which two people have an economic partnership. The economic partnership may be informal or formal, but there must be an intention to share in profits and losses. People in a joint family venture are considered to have an equitable claim to any property acquired during the relationship, even if only one person's name is on the title.
Unjust Enrichment & Constructive Trust
If you can show that you contributed to the increase in value of your common-law spouse's property, and that you did not intend to make a gift, you may have a claim to a share of the property. The claim is called "unjust enrichment" and is based on the principle that it would be unfair for your common-law spouse to keep all the benefits of your contribution. A court may order an equalization of net family property.
If you can show that you contributed to the purchase of your common-law spouse's property and intended to own an undivided interest in the property, you may have a claim to a share of the property. This claim is called a "constructive trust" and is based on the principle that it would be unfair for your common-law spouse to keep all the benefits of your contribution.
Resulting Trust
A resulting trust is a legal theory that says one person holds property for the benefit of another person. This can happen if one spouse paid for the property, but the name on the title is in the name of the other spouse.
Conclusion
It is important to understand the basics of common-law property division in Canada to make informed decisions about your own property and finances. Although the laws vary by province, there are some general principles that apply across the country. For example, common-law couples are not automatically entitled to an equal share of property, but rather each person is typically entitled to the property that they brought into the relationship or acquired during the relationship. Additionally, common-law couples do not have the same rights as married couples when it comes to property division, so it is important to seek legal advice if you are planning to end a common-law relationship.
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