PROPERTY DIVISION FOR UNMARRIED COUPLES GENERAL INFORMATION

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Justin Simpson
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1 PROPERTY DIVISION FOR UNMARRIED COUPLES GENERAL INFORMATION Introduction Many people think that there is some special magic to the term common law couple. People say oh, we ve only been living together for six (6) months so we aren t common law yet. People think that once they are common law that all the same rules as a married couple will apply. This is not the case. First, there is no one specific definition of a common law couple. When we are talking about unmarried or common law couples and property division, we mean two people, of either the opposite sex or the same sex, who have lived together in a conjugal relationship for a period of time. Second, unmarried or common law couples do not have the same property rights as married couples. Are married and unmarried couples treated the same? Unlike married couples, there is no specific law in Alberta to deal with property division for unmarried, or common law couples. There is no presumption that property acquired by unmarried partners while they were living together be shared equally when the relationship ends. What is the rule for unmarried couples? The rules in Alberta about property division for unmarried couples are very uncertain. The general rule is that property acquired by a couple during the relationship belongs to the party that paid for it and in whose name it is registered. There are some exceptions to this general rule, such as: Canada Pension Plan ( CPP ) credits where parties have lived together for 12 consecutive months and then have been separated for 12 months, either party can apply to have to have the CPP credits built up during the time they lived together divided equally between them. Land in joint names where parties have acquired land in joint names (either as joint tenants or tenants in common ) during the relationship, either party may apply under the Law of Property Act for an order physically dividing the lands, a sale of all or part of the land, a division of the proceeds between the co-owners of the land, or a sale of the interest of one co-owner to another. 1

2 Equity where parties have lived together for a significant period of time and/or the circumstances of the relationship are such that it would be unfair for one party to keep the property acquired during the relationship, it may be possible to ask the Court to divide property in a different way. How do I have these exceptions apply to me? If you have separated from your common law spouse or partner and you would like to have any of these special rules apply to your property, you should do the following: CPP credits if you would like to equalize the CPP credits built up by you and your common law spouse or partner during the time you lived together, you can apply by contacting Social Development Canada ( Land in joint names if you would like to put jointly owned land into one party s name alone, you can apply to the Court of Queen s Bench of Alberta by Originating Notice for an Order dividing the land or changing the owner of the land. Equity if you would like to have the Court order an equitable (fair, but not necessarily 50/50) distribution of the property acquired by you and your common law spouse or partner during your relationship, you can start a court action in the Court of Queen s Bench of Alberta by Statement of Claim. You will want to start a court action for unjust enrichment, but because this is a very complex area of the law, you should talk to a lawyer before you file any documents with the Court. Unjust Enrichment What is unjust enrichment? As already mentioned, unjust enrichment is what you would claim if you want to divide your property with your common law spouse or partner and you think it would be unfair for the general rule to apply. In other words, you think it would be unfair for your common law spouse or partner to keep all the property paid for by him/her during the relationship and/or registered in his/her name alone. Unjust enrichment is an equitable form of relief. What this means is that you are asking the Court to do what is right and fair in your case. 2

3 How do I prove unjust enrichment? Very often in common law relationships, one partner dedicates more time, energy and money than the other to maintaining the household, raising the children, and looking after the property. This generally allows the other partner to dedicate more time to work. His/her salary can then go towards paying down the mortgage, buying other assets, and even saving for retirement. Although each partner has contributed to the relationship, only one partner has made a financial contribution and only one partner has acquired assets. The Courts have said that, in cases like this, there needs to be some consideration given to the non-financial contribution of the other common law spouse or partner. If you want a Court to recognize your non-financial contribution to the common law relationship, and make a property distribution based on unjust enrichment, you must be able to show three things: 1. a gain by one party; 2. a loss by the other party; and 3. no legal reason for the gain or loss. If you feel that your circumstances have these three things, then you may be able to claim unjust enrichment against your spouse. What are some examples of unjust enrichment? Some examples of situations where one spouse or partner may have a claim against the other for unjust enrichment are: Example 1 - Paul and Jane are a young couple in their 20s. They have lived together for three (3) years in a house owned by Jane. Jane and Paul each had their own cars before the relationship and did not buy any property together. Jane worked as an accountant during the relationship while Paul went to school full-time to become a chef. Jane paid for the mortgage and paid all the bills. Paul spent his summers fixing up the house he built a garage, painted the house, and renovated the upstairs bathroom. When Paul and Jane separate, they would each get to keep their own cars. Because the house is in Jane s name, the house would belong to Jane under the general rule. Jane would get to keep the increase in value of the house even though Paul was the one who did all the repairs and renovations to the house. Paul would get nothing from the house. If Paul made a claim for unjust 3

4 enrichment against Jane, he may get some money from Jane for the house. Example 2 Simon and Claire have lived together for 12 years and have two (2) young children together. Simon worked as a carpenter and Claire has worked on and off as a retail clerk. Claire took about six (6) years off from work to stay home and raise the kids. During the relationship, Simon and Claire lived in the house that Simon inherited from his father and he kept it in his name alone. Simon paid for all the household expenses out of his salary and Claire s money went towards groceries and clothes and toys for the kids. Simon and Claire bought a lot of furniture together for the house, but Simon paid for it all. Simon also put a about $15,000 into his RRSP s. Under the general rule, Simon would get to keep the house, the furniture and his RRSP s. If Claire made a claim against Simon for undue hardship, she may get some money out of the house, half of the furniture and half of the RRSP s. Example 3 John and Mary have lived together for 25 years. Both of them were in their late 40s when they met so they each owned their own home, and had many other assets in their own names when they started living together. Mary sold her house to move in with John 25 years ago and the house stayed in John s name. In the early years, Mary cooked and cleaned and looked after the house while John worked. When John retired, they sold John s house and bought a cabin and a boat together in John s name. They also bought a very expensive apartment in the city in Mary s name. Eventually, Mary got sick and John had to look after her and the apartment. When John and Mary separate, John would get to keep the cabin and boat and the other assets he has in his name and Mary would get to keep the apartment and the other assets she has in her name. Because of the length of their relationship and the contributions each party made to the other, this may not be a fair way to divide their property. As a result, each party may be able to claim unjust enrichment against the other and try to get a more equitable distribution of the property. Conclusion There are a lot of circumstances when it may not make sense to apply the general rule of property division for unmarried couples. Using the law of equity to claim unjust enrichment may be the only fair way to divide a common law couple s property. But, this can be very difficult because this area of the law is not written down and it can change depending on the 4

5 specific facts of each case. This handout is intended for information purposes only and, as such, provides just a brief overview of the steps and rules for dividing property between common law spouses or partners. If you think that you may be able to claim unjust enrichment in your situation, protect yourself by speaking with a family law lawyer. This publication has been prepared by Family Justice Services, and provides general information about the law as of the date it was written. It is not intended to provide you with legal advice. If you want advice on your case, speak to a lawyer. 5

Matrimonial Property General Information

Matrimonial Property General Information Introduction What is the Matrimonial Property Act? Each province in Canada has its own law to deal with the division of property on marriage breakdown. In Alberta,