How are Married Couples & Common-Law Couples Different When it Comes to Property Division?
When experiencing the breakdown of a relationship, there is often little difference, emotionally and financially, between those who are married and those who are in a common-law relationship or common-law spouses. However, legally, there are a number of distinctions made for couples based on whether they are legally married or not.
There are two different pieces of legislation that govern property division in Ontario. The first is the federal Divorce Act, while the second is the provincial Family Law Act.
Those couples who are legally married are able to apply for judicial assistance under both the Divorce Act and the Family Law Act, while common-law couples can only look towards the Family Law Act. Under the Family Law Act, a common-law relationship is established if two people who are not married have cohabited continuously for at least 3 years, or if they have cohabited in a relationship of some permanence and are parents of a child.
Marriage is viewed as a partnership and the legislation views each party of the marriage as having an interest in the property acquired during the marriage, with a few exceptions. This means that upon the breakdown of their relationship, even if a person does not have the legal title to a piece of property or item, they likely still have an interest in such property that they should be compensated for. When a marriage comes to an end, the family law system wants to ensure that each party is leaving the relationship on equal footings, and therefore when one person in the relationship has more property or net worth than the other, an equalization is required.
Equalization is determined by comparing the net worth of each individual in the marriage. This is done by taking two metaphorical snapshots of each person: one of what the person was worth on the date of marriage, and the second of what the person was worth on the date of separation. The value from the date of separation is then subtracted from the value on the date of marriage, to determine how the marriage affected the person’s worth; whether it had increased, decreased, or stayed the same. The difference between a spouse’s worth on separation compared to their worth on the date of marriage is called their net family property. If your spouse has more net family property than you, your spouse will have to pay you the difference between both your values, in order to make it so that you both have the same net family property amount upon leaving the relationship.
Common-law couples do not have any entitlement or assumption of equal division. Whatever property a person owns at the start of the relationship or upon the breakdown of the relationship is not compared or examined in any way. This means that unless you have legal title to the property, you are not assumed to have an interest in the property, and you have no automatic right to it.
The Courts have tried to remedy the fact that common-law couples are not recognized under the Family Law Act with respect to property. If you believe you should have an interest in something that your former partner owns, that you are being wrongfully denied an interest in property by your former partner, or that you should be compensated in some way in relation to property owned by your former partner, you can try to make an equitable claim in court to remedy this injustice. There are two main types: either a claim of resulting trust or a claim of constructive trust.
Although equalization and resulting or constructive trusts are separate and distinctive claims, they all have many nuances that can make them quite complicated and confusing, and therefore, it is best to consult a family law lawyer to help form your claim.