When relationships break down, the laws regarding division of property do not apply to common-law couples as they do to married spouses when they divorce. If you are in a common-law relationship, the general rule of thumb is: anything that you bring into the relationship with your own money, and in your own name, will still belong to you after separation. However, items that are jointly purchased will be divided, or shared in value, after separation.
Some Examples of How Division of Property Works for Common Law Partners
Matrimonial Home: Common-law partners do not have equal rights to possess the “matrimonial” home, which is treated like any other asset. It belongs to the person who purchased it, or to both people if jointly purchased. This means that if the home is in someone else’s name, you do not automatically have the right to stay in it after separation. The other person may sell or mortgage the home without your permission. Treatment of the matrimonial home is one of the major distinctions between common-law relationships and marriages.
Debts: Common-law partners are responsible for their own debts, unless they have a well-drafted agreement that says otherwise. This means that you are responsible for repaying your own debts and your partner is responsible for his or hers. However, if the debts are shared, then both partners are responsible. For example, if both of your names are on a mortgage, loan, or line of credit, the bank can pursue either or both of you.
Engagement Rings: This is a grey area that is often overlooked. The law is not clear regarding the treatment of engagement rings for couples who were about to marry before they broke up. Sometimes courts have found that the person who ended the relationship forfeited his or her right to the ring. Other times, courts have held that the ring was an unconditional gift and remained the property of the recipient after separation.
In special cases, there are equitable remedies available for a partner who has contributed so much to the relationship that a strictly equal division of property would be fundamentally unfair. Some examples of significant and relevant contributions may include:
- Caring for the children and home while your partner spent time growing a business
- Paying for all the household bills while your partner put money into savings
- Paying for renovations on a house owned by your partner
- Managing all the bookkeeping for your partner’s business
The contributing partner may want to argue that the receiving partner was unjustly enriched by the contributing partner’s actions. A claim for “unjust enrichment” against your partner is very fact-specific and requires you to establish the following links:
- You partner received a benefit;
- You suffered a corresponding loss; and
- There is no “juristic reason”—or explanation based upon law— for your partner to keep this benefit.
If you can prove unjust enrichment, you can ask for a “constructive trust” to remedy the situation. A constructive trust gives you a right to a specific asset or piece of property, such as the matrimonial home. A court can also grant a monetary reward if you can prove that your partner is unjustly retaining a disproportionate share of the profits of a “joint family venture”—or the joint efforts of partners in a relationship that are linked to the accumulation of wealth. It is important to note that not every common-law relationship constitutes a joint family venture. In order to determine if a joint family ventures exists, the courts look at numerous factors surrounding mutual effort, economic integration, intent and priority of the family.
The bottom line is: claims based on unjust enrichment and constructive trust are very difficult to prove in court, but may be a necessary recourse. Generally, it is highly recommended for common-law couples to draft a solid cohabitation agreement from the outset of the relationship. A cohabitation agreement is similar to a prenuptial agreement and can address issues like division of property. However, if there was never an agreement drafted and signed, there are still options for a fair outcome. If you feel that you have contributed something substantial to your common-law relationship and want to claim for a constructive trust in order to remedy unjust enrichment, it is imperative that you seek representation and put your best foot forward in making this complex claim.
If you have more questions, please do not hesitate to contact Tailor Law for a free initial consultation with one of our experienced family law lawyers.
Do you have children involved in your separation, read: Common Law Divorce: Child Custody & Access in Ontario