One of the biggest differences between married and unmarried couples relates to the division of property in the event of separation. Along with marriage comes the right to a special regime of property division.
The matrimonial home
Defined under the Family Law Act as the home that was ordinarily occupied by the married spouses as their family residence at the time of separation, the notion of a “matrimonial home” is exclusive to married couples. Irrespective of the legal ownership of the home, both married spouses have a right to equal possession of the matrimonial home and neither can sell, dispose of or encumber the matrimonial home without the other spouse’s valid consent.
On the contrary, the home that common law partners reside is not considered a “matrimonial home”; hence they cannot claim the associate privileges. Unless a former common law partner is the legal owner of the home, he or she does not have an automatic right to share in the equity or possession of the home, nor an automatic right to share the property of his or her former partner.
Equalization and property division
Pursuant to the Ontario Family Law Act, divorced or divorcing spouses are entitled to apply for the equalization of the family property; that is to apply for an equal division of all property acquired by the couple during their marriage. Unmarried spouses are however excluded from the matrimonial property sharing provisions of the Family Law Act.
As a general rule, the value of the property accumulated during the marriage is equally divided between the two spouses. To determine each spouse’s “net family property”, the net value of each spouse’s property on the date of marriage is deducted from the net value of their property on the date of separation. The spouse whose net family property is the lesser of the two is entitled to one-half the difference between them. This means that each spouse becomes entitled to one half of the value of the property accumulated during the marriage (not one half of the property itself).
What does it mean?
Unless you are legally married, you are not entitled to an equalization of the riches you have mutually accumulated during the course of your relationship. Consequently, upon the end of your common-law relationship, there is no automatic right to share in the wealth accumulated by your common-law spouse. Similarly, there is no obligation to share.
One way to overcome this inequality is to acquire property jointly, which will provide each spouse with legal ownership rights.
In order to get an equitable division of the assets accumulated during a common-law relationship, a claim against a former common-law spouse must be based on contract law or an equity principle such as unjust enrichment. In both Kerr v Baranow and Vanasse v Seguin, the Supreme Court of Canada made it easier for unmarried couples to claim a share in the wealth accumulated during the relationship where the circumstances indicate that the parties have engaged in a “joint family venture”. However, it may be difficult to prove a “joint family venture” and the results in these cases are unpredictable.
Couples who choose to live in common-law relationships should consider discussing their mutual rights, obligations and financial expectations with a family lawyer and making a cohabitation agreement. Such discussions would ideally take place before moving in together.
This blog post was written by Kate Wright, with the assistance of Articling Student Oumnia El Fadl. Kate is a member of the Family Law, Wills and Estates and Litigation teams. She can be reached at 613-369-0383 or at firstname.lastname@example.org.