Property rights on separation for cohabiting couples
Earlier this week, TMZ reported that Mariah Carey has moved in with her boyfriend, James Packer, and that the happy couple has been discussing future plans for marriage.
Cohabitation is a big step. However, merely moving in with each other does not automatically mean that conjugal partners are common law spouses. Section 29 of the Family Law Act (FLA) provides a definition of common law spouse for spousal support purposes to include either of two persons not married to each other and who have cohabited either:
- Continuously for a period of not less than three years; or
- Lived in a relationship of some permanence and have a child, either natural or adopted, together.
For unmarried couples, the optional step of marriage marks a tremendous legal commitment. It is not uncommon for common law spouses to decide that marriage is unnecessary as they consider their relationship and cohabitation to be a sufficient indication of their commitment to each other.
For couples in Ontario, the choice to remain a in a common law relationship or to get married can have a significant impact on the spouses' legal rights and obligations in the event of separation.
Most significantly, there are substantial differences in property rights between married and unmarried couples.
Married couples who are separating or divorcing are legislatively entitled to the equal division of financial wealth accumulated during the course of the marriage under the FLA's equalization regime. In contrast, unmarried spouses are only entitled to the property that is in their name regardless of whether it was acquired before or during the relationship. They are excluded from the FLA's equalization regime and thus lack the right to equal division of property.
Despite this exclusion, unmarried spouses have other available options for relief. Spouses who are not on title may be able to gain an interest in the property or a share of its value through remedies such as a constructive trust or joint family venture. These claims are often raised in situations where cohabiting spouses have invested a great deal of time, effort and resources into accumulating assets and building a life together.
A successful constructive trust claim will grant the non-title holding spouse an interest in the property which may include the right to possess or the right to share in its value or any generated income.
The first step for any constructive trust claimant is to establish that there was an unjust enrichment of the title-holding spouse and a corresponding deprivation to themselves. There also must be no juristic or legal reason for the enrichment enjoyed by the title-holding spouse. Finally, there must be a connection between the claimant's contribution and the specific property for which they are claiming a beneficial interest.
A joint family venture is an alternative to the constructive trust which grants a successful claimant a share in the value of the property, rather than a proprietary interest. Establishing a joint family venture usually results in a monetary payment that represents the percentage of the claimant's contribution during the relationship.
There are four factors a court will consider to determine if whether there was a joint family venture:
- Mutual effort such as a pooling of effort and team work, the length of the relationship, and the decision to have and raise children together;
- Economic integration such as a co-mingling of the couples' finances and economic interests;
- Priority of the family as indicated by evidence that the spouses have been cooperatively making decisions related to career and/or children with the understanding that they are sharing a future; and
- Actual intent of both parties to share their lives as indicated by their conduct, beliefs, and arranging of their business or financial affairs.
Like with a constructive trust claim, the claimant must also establish a connection between their contribution and the increase in wealth.
If Mariah and James were to separate at this point in time, each would likely leave with what they brought into the relationship given the short amount of time to have invested any significant resources or effort.
Another issue, as that Mariah and James are in the preliminary stages of cohabitation, is that under Ontario law, Mariah would have to leave James's home if they broke up. The matrimonial home in a marital relationship is given special treatment pursuant to Part II of the FLA. Under section 19(1) of the FLA, married spouses each have an equal right to possession of the matrimonial home which can only be ousted by a court order for exclusive possession.
Once again, unmarried couples are not afforded the same protection as Part II of the FLA only applies to married spouses. An unmarried spouse who is not on title has limited options if they want to remain in the matrimonial home. They can make a constructive trust claim to acquire a joint possessory right, or apply for a restraining order removing the other spouse from the home.
For Mariah and James, it's a bit too early to evaluate how their rights could play out if they separated now or after they married. For unmarried spouses in Ontario, however, these issues are important to keep in mind if you're contemplating on whether or not to tie the knot.