Common-Law Conundrum: Who Gets The House After The Split?
Couples used to exchange vows before signing a mortgage, but more and more millennials are opting to say yes to a house before a dress.
While 78.7 per cent of Canadian couples living together were married in 2016, 21.3 per cent were in a common-law partnership, according to the latest numbers from Statistics Canada. That number jumps to 34.7 per cent for adults aged 20 to 34, an increase from 33.3 per cent in 2011.
Of course, not all of those couples own property together. But those that do may have to face a difficult question down the line — in the event of a breakup, who is legally entitled to what?
It’s an answer that varies somewhat depending on where you live. While Canada does not acknowledge true common-law marriage at the federal level, some provinces recognize common-law relationships depending on the legal context.
In Ontario, while legally married couples are entitled to a division of assets between spouses, common-law partners aren’t as lucky. In the event of a common law split, each person keeps whatever they happen to own. That means property too — so it’s important to make sure both partners names are on the deed of a home.
“Each person keeps what is in his or her name. Joint property is shared equally and sold if necessary to divide the proceeds,” writes Jeffrey Behrendt, a family law lawyer in Ottawa, in a recent article on his website. “If one person is not satisfied with this result, they can make a claim for what is known as unjust enrichment or a claim for a constructive trust. These types of claims tend to be complex, difficult, and uncertain.”
If a common law couple jointly owns a property but cannot decide what to do with the home, a judge will sometimes order it sold in order to split the proceeds. If a member of the couple is not named on the title of the home, they have no rights to the property and can be evicted.
But, in the event of a split where one partner has contributed financially to the home but is not named on the deed, making a claim for “unjust enrichment” is an option.
“A common-law spouse, if it turns out that he or she contributed to the spouse’s property by either working the land or building a house or making a renovation to a building or paying on the mortgage, can claim for a return of the benefit imparted to the owner,” reads an article from Ottawa-based family law firm Sullivan Law.
As long as the partner in question didn’t have a legal reason to benefit — say, paid wages for their work — they have grounds to make a claim for a return.
The best advice when it comes to buying property with someone who isn’t your legal spouse? Behrendt puts it succinctly: “Don’t pay for things unless your name is on the title.”