Last month I wrote a blog post explaining how and when partners become common-law spouses in Ontario. That blog focused mainly on spousal support and not the division of property, because the Ontario Family Law Act only provides for property division for married spouses. In Ontario, there are no legislated provisions for property division for common-law spouses. That means, when common-law couples separate, their property is divided based on ownership; that is, each party keeps what they own at the time of separation. However, common-law spouses may be able to make claims to property in certain circumstances, which I will set out briefly below.
Common-law couples can gain an interest in their partner’s property through equitable claims and remedies (which is a discretionary remedy of the court). The most common equitable claim is unjust enrichment. Equitable remedies are not exclusive to common-law couples, but are available between any two parties.
Generally, unjust enrichment requires the person claiming an interest in their partner’s property to prove that they have taken actions, to their detriment, that have benefitted the financial situation of the other spouse, and there was no juristic reason for this benefit. An example of a juristic reason could be an agreement to cut the grass once a week instead of paying rent; in that case, a claim for unjust enrichment for cutting the grass would be unsuccessful because the agreement provided a juristic reason.
An actual example of unjust enrichment could be where one spouse spends a significant amount of time and money making improvements to the other spouses’ solely owned home, disproportionate to any benefit they may have received from just being able to live in the house. This area of law is very discretionary and based on the facts in each scenario. Just doing some painting or one little renovation is unlikely to meet the test. If there’s an explanation as to why you spent your time and money on a property owned by someone else, you may not get any relief from the court. Often it’s one person’s word against the other’s, and there is little supporting evidence to prove either party’s position.
Depending on the nature of your unjust enrichment claim, the remedy could be payment of money equal to the amount contributed (either amounts actually spent or the value of work provided). Other remedies include constructive trusts, which could for example provide you an ownership interest in a property. In some circumstances, common-law spouses who prove that there has been unjust enrichment may be entitled to the relief of a joint family venture. This provides for a re-distribution of the wealth accumulated by the family, although this remedy still will not be the same as the equalization for married spouses.
Long story short – do not contribute to another person’s assets without a cohabitation agreement confirming your expectations of reimbursement. Otherwise you may end up in a sticky legal situation. These legal battles sometimes cost more than the assets in question.
One final property issue to look out for is joint assets and debts. If you put money into a joint account or asset, the other joint owner is entitled to half, no matter who contributes and how much. Note that there may be equitable remedies such as the presumption of resulting trust, but all the warnings about unjust enrichment apply here as well.
Similarly, joint debts are shared equally no matter who incurred the debt – so make sure your partner isn’t incurring debt in your joint name that you aren’t willing to pay half of.
In Ontario, unless you get married or you sign a domestic contract or cohabitation agreement opting into a property-sharing regime, no matter how long you live with your partner, you will not be entitled to seek an equalization payment. If you do not have a cohabitation agreement, the longer you live together with your spouse, and the more your finances intermingle, the greater risk that there will be an unfair result if you separate.
To read more about division of property for common-law spouses in Ontario, check out our previous blog post.