Division of Property in Common Law Separations

crack in concrete

Determining how property is to be divided between a separated couple can be difficult. Unmarried, or common law couples do not fall within many of the sections of the Family Law Act governing property and equalization. Common law separations can require detailed negotiations and special considerations for jointly owned property and can require the assistance of legal counsel. Some general principles of the division of property after a common law separation are set out in this blog.

Cohabitation Agreements and Property Division

The first step in dividing an unmarried couple’s property is to see if the couple has a signed cohabitation agreement. Cohabitation agreements may contain specific provisions that lay out who will get what property if the couple breaks up, simplifying the division process. The agreement may also contain a formula for determining how assets or property is to be managed upon separation. Cohabitation agreements can also make the process of creating a separation agreement much simpler and helps to settle the couple’s property matters.

If there is no cohabitation agreement, the general rule is each partner will leave the relationship with the assets and debt they brought into it, along with any increase in property value. Jointly owned assets are divided between the couple. Where physical division is not possible, the couple may agree to a specific division of their property or choose to sell property to share in the proceeds. Detailed record-keeping can save couples money and time by documenting contributions to property, ownership of assets, and any agreements between the parties about division of property upon separation.

Compensation and the “Joint Family Venture” Principle

Where one partner contributes to the other partner’s property while living together, the contributing partner may be entitled to receive compensation for that added value. For example, this can occur where the non-owning partner contributes to the cost or labour involved in a home renovation or pays part of the mortgage.

In determining issues of compensation for contribution to property owned by one partner, courts may use the “joint family venture” principle. This principle was set out in the Supreme Court of Canada’s joint decision in the cases of Kerr v. Baranow and Vanasse v. Seguin, which reviewed the issue of compensation for unjust enrichment arising from a joint family venture. Both cases involved the separation of a common law partnership with one partner claiming compensation on the grounds that their contributions to the couple’s mutual welfare and/or non-jointly owned property constituted unjust enrichment of the other partner.

The Supreme Court of Canada held that in such cases, courts must determine whether there was a joint family venture between the cohabiting couple. This is done by looking at the nature of the couple’s relationship and how they lived their lives together. This includes four factors:

  1. Mutual effort, which is demonstrated when the partners had shared goals that they worked together to achieve. Some situations of mutual effort are where a couple has lived together for a long time, pooled efforts and resources, and/or raised children together.
  2. Economic integration, which occurs when couples integrate their finances through methods like sharing expenses or having a joint bank account. The more integration of the couple’s finances, the more likely they will be considered to have engaged in a joint family venture.
  3. Actual intent of the parties, both express and implied, is considered. This involves looking at all of the circumstances of the relationship; for example, whether bills and expenses were specifically and regularly handled by the same partner, or whether the couple considered themselves to be long-term partners or spouses.
  4. Priority of the family considers whether there has been sacrifices made by either partner for the betterment of the family unit, such as giving up a career opportunity to care for the couple’s children or relocating for the other partner’s job.

If the court determines there was a joint family venture in place, it will review whether there is a connection between the partner’s contributions and an increase in the receiving partner’s assets or property value. If so, this unjust enrichment may result in a monetary award or property interest being granted to the contributing partner in a manner that is proportionate to their contribution.

Contact Bortolussi Family Law in Vaughan for Advice on Property Division After Common Law Separation

Bortolussi Family Law is an experienced family law firm located in Vaughan and servicing clients across the Greater Toronto region. We are knowledgeable in common law family matters and can advice unmarried clients on property matters at any stage of their relationship. We can draft a cohabitation agreement during a relationship to ensure the parties’ expectations and rights regarding property are documented, reducing the risk of conflict or misunderstandings if the couple separates. Our team also assists clients by creating comprehensive separation agreements upon the breakdown of relationship to address property issues, as well as support and parenting matters.

To find out how we can help you with your family law matter, contact us at 416-987-3300 or online to arrange for a consultation today.

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