REMAX Garden City Realty Inc. Brokerage - Niagara and Halton

For unmarried couples who reside together but with only one name on title, there are important considerations that if overlooked can lead to difficulties in the event the relationship breaks down. Couples may wonder if they are “common law” spouses, and how this legal status affects them. Under the Family Law Act, certain rights and obligations can arise for those who have cohabited continuously for a period of not less than three years. However, couples may be surprised to learn that the Act does not give them any automatic entitlements with respect to property. Instead, the courts must rely on different legal tests when dealing with unmarried couples.

One of the biggest distinctions between the rights of married and unmarried spouses is the right to remain in the matrimonial home on separation. While married spouses have equal rights to possession of the matrimonial home under the Family Law Act, the same does not apply to unmarried couples. This means unless your name is on title to the property, you cannot assert a right to remain in the home. While this rule offers predictability for homeowners who enter relationships after owning their home, it creates other challenges for spouses who cannot go on title for financial or other reasons.

When dividing property, the general framework for unmarried couples is that each partner keeps the property they brought into the relationship, what they paid for during the relationship, and their share of debts and joint assets. It may be that the parties work out their differences through a separation agreement, or that a cohabitation agreement was previously in place. However, unforeseeable challenges can arise. Consider a partner who financially contributed to the purchase of the home. However, their name was not placed on title. Now the parties have separated, and the value of the property has increased substantially. Should the contributing partner benefit from the increase in property value?

The principle that guides the courts in difficult situations is known as unjust enrichment. To make this claim, a party must show that they contributed to the property, that partner benefited from the contribution at the claimant’s expense, and there is no legal reason for the partner to keep the benefit. The precedent setting case on this topic is Vanasse v Seguin. There, Mr. Seguin took an opportunity to relocate his business to Halifax, and Ms. Vanasse gave up her lucrative career to support him and their children. After separation, the parties were in vastly different financial circumstances. The Court reviewed four main criteria and determined that a “joint family venture” existed. Ms. Vanasse was awarded one half of the family home, and one-half interest in the prorated increase in Mr. Seguin’s net worth during the period of the unjust enrichment.

Another issue facing common law spouses relates to when a party is added to title when they have not financially contributed to its purchase or ongoing costs related to the property. This was recently highlighted in the case of Griffith v Davidson. There, an unmarried spouse claimed that he had made all payments on the home and that she was only added to title for estate planning reasons. He asked the court to find that his wife’s interest in the property was really held in trust for him. The Ontario Superior Court disagreed. The Court looked to the intention of the spouse at the time of the purchase and concluded he intended to gift her a 50% interest in the home. He was required to either buy out the former spouse’s half interest or sell the home and divide the profits.

The situations discussed above demonstrate that while common law partners do not have the same entitlements as married spouses, knowing your rights prior to investing with your partner can save confusion and stress in the end. Those who wish to learn more about the legal consequences of their home or investment purchase should contact a trusted legal professional. Liddiard Law Professional Corporation

 
Michael Liddiard, JD  |  Liddiard Law Professional Corporation  |  michael@liddiardlaw.ca