Common Law and Property Equalization

When a marriage is dissolved, each partner is entitled to share one half of the increase in value of their family property and must also share in the losses amassed while they were married. Any increase in the value of property owned by one spouse during the time the couple was married must legally be equalized. When it comes to common law and property equalization, not all things are exactly equal.

For couples in common law relationships these same equalization provisions simply do not exist. In Family Law, equalizing property in this manner is strictly an advantage afforded to legally married couples.

In most situations, at separation, each spouse in a common law relationship would simply get to keep what belongs to them, which also includes their debts.

The matrimonial home in Ontario holds special status for married couples.

The Family Law Act, entitles married spouses to a credit for any asset they brought into their marriage, but if the matrimonial home is brought into the marriage and still qualifies as a matrimonial home at the date of separation, this credit is not received.

However, for common law couples this special treatment does not exist. The family residence is considered on par with any other property each may possess, which means that when the relationship comes to an end, the person who is on title retains the home. If the home is under both names, then each would be entitled to their share.

That said, if you were involved in a common law relationship that has now ended, there are ways for you to seek a portion of your ex-partner’s property however the process is not automatic like it is for married people and the standards are much higher.

For example, if one common law spouse owns property, the other may be entitled to make a constructive trust claim against the property based upon the rules of ‘unjust enrichment’. This exists when one of the spouses is enriched at the expense of the other and there are no legal grounds for this enrichment.

A successful trust claim would, in effect, provide a repayment of any direct or indirect contributions the spouse making the claim may have made during the time the couple was to together.

In support of this, it should be noted that in 2011, the Supreme Court of Canada made a ruling that significantly alters how property division should now be determined for common law couples.

The court ruled that if a “joint family venture” (i.e. both spouses intended to create an enterprise and live jointly as a family and not as two separate entities) can be proven, then the spouse claiming unfair compensation (provided they have sufficient proof of their contributions) may be entitled to a just share of the assets equal to their contributions.

If you have any issues pertaining to a common law relationship and wish to know your rights, we can help. Book a private consultation with Gelman & Associates today – (416) 736-0200 or 1-844-736-0200.