Unlike married couples, common-law couples (couples who live together but are not married) are not entitled to the equalization of their family property. The provisions in Ontario’s Family Law Act (FLA) that govern the division of property apply only to married couples, not to common-law couples. Each partner in a common-law relationship is therefore entitled only to whatever he or she brought into the relationship or acquired during it.
How Does "Common Law" Work?
If two people have been living together for some time, then sorting out who bought what or who brought what into the home can be complicated; but the general rule of thumb is:
- Items purchased during the relationship belong to the person who paid for them
- Items purchased jointly will usually be divided
Who Gets the House?
The family home is treated like any other asset, and belongs to the person who purchased it, or to both partners if they purchased it together.
How Is Debt Divided?
The same rules hold true for debt: each partner is responsible for their own debts. If both partners’ names are on a mortgage, loan, or line of credit, the bank can pursue either or both spouses.
Who Gets the Engagement Ring?
Many engaged couples wonder about the status of the engagement ring if they break up before the wedding day. Who is entitled to the ring? In truth, the law is not clear.
Ontario’s Marriage Act, s. 33 says that, in determining whether the giver is entitled to the return of any gifts made in contemplation of marriage (like the ring), the role of the giver in causing the relationship breakdown shall not be considered. However, courts have often been inconsistent in applying this law. Sometimes courts have found that the person whose actions terminate the relationship forfeits the right to the ring. Other times, courts have held that the ring is an unconditional gift and, like any other gift made during the relationship, it therefore remains the property of the recipient.
Constructive Trust / Unjust Enrichment
If you have been in a long common-law relationship and you feel that you have contributed extensively to the value of a certain asset that belongs to your partner—a home in which you lived, or a pension or savings account, for example—and that it is therefore unjust for your spouse to retain the full value of that asset, then you are not entirely without recourse.
While, as indicated, a common-law partner is not automatically entitled to equal property division or to share the family home, you can make a claim for a constructive trust to remedy unjust enrichment. In order to show unjust enrichment, you will have to show that:
- You and your partner were engaged in a joint family venture; and
- Your partner is retaining a disproportionate share of the profits of that venture.
A constructive trust gives the beneficiary a right to property in a particular asset, such as the matrimonial home. A court can also award a monetary remedy for unjust enrichment if one partner can prove that the other is unjustly retaining a disproportionate share of the profits of a joint family venture, but there is no link between the one partner’s contributions and a specific asset or piece of property.
Litigation in this area can be difficult and complex. It is not easy to predict when courts will find a joint family venture and unjust enrichment or what award they will give. The claims are necessarily very fact-specific. If you want to pursue this type of claim, then you should consider retaining an Ontario family law lawyer experienced and knowledgeable in this area.
In order to determine whether you and your partner were part of a “joint family venture,” the courts may consider a variety of fact-specific questions, such as:
- Was there was a pooling of resources (for example, did both parties invest money in a business or home)?
- Did the parties have children together?
- Were decisions made jointly about children or finances?
- How integrated were the parties’ accounts? Did they share joint bank accounts or credit cards?
- Did the parties see their relationship as equivalent to marriage?
- Did they identify themselves as common-law, such as on tax returns?
- In general, did the partners prioritize the family as a unit over themselves individually? Did they make decisions, such as to move or change jobs, for the sake of the family?
The longer a relationship, the more children there are together, and the more integrated the finances, the more likely a court will find a joint family venture.
If a joint family venture is established, then you will then need to show that your partner profited unfairly from that venture and is walking away from the relationship with a disproportionate percentage of the profits. More specifically, you must establish that you have, through your contributions of money or labour, enriched your spouse; that you suffered a corresponding deprivation in making those contributions; and that there is no legal reason for the enrichment (such as a contract, a gift, or inheritance).
Constructive Trusts: Financial & Labour Contributions
As indicated, your labour may be linked directly to the increased value of a specific property item. For example, perhaps you worked extensively to renovate a home that your partner owned, thereby greatly increasing the value of that home. In that case, courts may find a constructive trust and, as remedy for the unjust enrichment, award your ownership of a percentage of that property that corresponds to your contribution.
In other situations, your work may be tied more broadly to the family venture, rather than a specific piece of property. For example, perhaps you took on household or child-rearing tasks in order to enable your partner to work or build a business, and the money from that business is not shared. In that case, the courts could award a share of the increase in value of the business over the course of the relationship.
When to Bring a Constructive Trust Claim
It is important that you bring a trust claim, or seek legal advice regarding that claim, as soon as possible after separation. If you do not bring a claim within two years of the date of separation, then it is possible that the other party could successfully argue that the limitation period has expired and that you are therefore barred from bringing your claim.
See our article: Common Law Separation for more information on other issues facing common law couples upon separation.
Do you have more questions about property division for common-law couples? Contact our firm today! Our Ontario family lawyers are experienced and ready to offer the insight you need. Call (905) 581-7222 now!