What you should know about common-law property division

By Tony Poland, LegalMatters Staff • With nearly one quarter of Canadian couples living in common-law relationships, it may be time for Ontario to consider changes in the law to deal with the division of property when such partnerships end, says Toronto family lawyer A. Julia P. Tremain.

Statistics Canada recently reported that 23 per cent of Canadian couples are living common law, the most of any G7 country. Yet despite that, in some provinces these couples do not have the same legal rights during a breakup as those who are married.

In Ontario, the Family Law Act dictates that all property acquired by a couple during a marriage must be split evenly if they divorce except in some exceptional circumstances. However, that provision does not apply to common law couples, says Tremain, a partner with Waddell Phillips Professional Corporation.

“In Ontario, common law means you can talk about support and decision making and parenting time with children but there is no legislation dealing with the equalization of property,” she tells LegalMattersCanada.ca. “And many people do not realize that. They believe living common law is the same thing as being married in this regard. It can be a significant shock when the relationship ends and people who have lived together, especially for a long time, discover that the property they assumed was half theirs is not necessarily so.”

Each province has its own laws

She explains that each province has its own laws dealing with the division of property. In B.C., for example, lawmakers introduced legislation nine years ago that calls for a 50/50 split of property assets among common-law couples

“That is not to say that Ontario couples living common law do not have any recourse when it comes to property division,” Tremain says. “They can make what is called a trust claim. But the process can be complex and going to court can be expensive. 

“It also depends on how vigorously your former partner opposes a division of property,” she adds. “Part of it will come down to whether the separation is acrimonious.” 

In a trust claim, a person would have to establish that “a trust was created by the actions of both parties during the relationship and that the other partner has been unjustly enriched” during the division of property,” Tremain says.

She says there should be some sort of compensation to make up for the inequity. However, the burden of proving a trust claim is on the person who brought it and it is not always a simple matter.

“For example, if the house was in one person’s name but both parties have been sharing all the costs such as the mortgage, monthly bills and renovations, you would think that the person whose name is not on the title presumably can make a claim for a portion of the value of the home,” Tremain says. “But it is not cut and dried. It can be a challenge to prove because you are not coming at it from the presumption that all the net family property will be equally shared as it is in a marriage.”

Litigation may be needed

Even if both names are on the title of the home, dividing the property equally can still require litigation, she says.

“The couple may have contributed unequally to the home during the relationship. There could be arguments about each partner’s contribution,” says Tremain. “One person could claim they made all the mortgage payments and did all the upkeep. At times it can be challenging to unwind who is entitled to what. Generally, that does not happen when a marriage ends.” 

When a couple agrees to live common law, they can have blinders on and generally prefer not to dwell on what will happen if the relationship fails, she says.

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“They don’t like to think about money. And they don’t like to think about the consequences of a breakup,” says Tremain. “But it is a smart idea to actually turn your mind to these things. 

“It certainly can be helpful to see a lawyer to draft a domestic contract. Something that lays out how you are going to deal with the division of property in the event of a separation,” she adds. “At least if you do end up in court, a judge can look and see what your intentions were.”

Tremain says while treating common law couples the same as those in a marriage when it comes to division of property may seem like the sensible thing to do, not everyone would necessarily be in favour of a change.

‘They want to keep their property separate’

“Some people disagree. They believe it should be different,” she says. “There are people who choose not to marry and to live together knowing that it frees them from the obligation of having to do an equalization of property. They want to keep their property separate.”

Improving property rights for common law couples is not the only change the government might want to consider, Tremain suggests. Noting that 15 to 20 percent of all claims that go to court when a marriage ends involves a trust claim, she says some would advocate that the property regime for married couples should be updated.

“There is an argument to be made that there should be more guidance about what happens if there is an unequal contribution to the home, whether you are common law or married,” Tremain says. “For instance, if one person takes on all the work of a renovation and the house ends up being worth several hundred thousand dollars more, should that person be compensated when the marriage ends and the house is sold? Or what if one person paid the $25,000 down payment on a house many years ago. Is that person entitled to a bigger share when the house is sold? These are the things people fight about.”

Of course, legislation is not always the answer, says Tremain.

“So many times, we have seen legislators make new laws designed to make things easier and all they really do is add another complication,” she says. “Sometimes the solution to a problem has the potential to actually make it more complex.”