Jill’s sister has been living in a common-law relationship with her boyfriend for 11 years. They have two children together, they own a home jointly and they have invested in a rental property through a company belonging to her boyfriend. In all aspects (except for the very expensive wedding), they are like a married couple. As of late, things have been rocky in their relationship and her sister has sought Jill’s guidance with regard to their rental property. She thought that since Jill is going through a separation herself, she would know the answer to her questions. However, Jill herself was married and she wonders if the same rules would apply to common law spouses.
The answer is NO. When it comes to property rights, things are very different for common law spouses than for married spouses. If you are married, Ontario laws very specifically set out how your family property is to be shared. The rules are clear and will be strictly followed by lawyers and judges (unless you and your spouse agree to share your property differently). However, this property division scheme does not apply to common law couples in Ontario.
It does not mean that non-married spouses have no legal remedies when it comes to property. To rectify what courts often saw as a terrible injustice, Canadian courts have created some legal principles which, if some conditions are established, allow common-law spouses to share in the value of a property owned by the other spouse following a separation. The main legal principle applied by Canadian courts to split assets between unmarried spouses is called “unjust enrichment”.
In simple terms, “unjust enrichment” may be established when one spouse made a contribution (financial or otherwise) towards the acquisition, maintenance or improvement of an asset (for instance a piece of property) which is owned by one spouse only, resulting in a financial benefit for the other party, to the first party’s detriment. In the case of Jill’s sister, it would be profoundly unjust if she did not get to share in the value of the property held in her boyfriend’s company name given that they contributed an equal amount of money and efforts towards its purchase and maintenance.
This said, proving unjust enrichment can be quite a challenge sometimes, and the cost of making this claim before a court of law can be out of reach for many people. For that reason, prevention is always better than cure, and many of the challenges associated with unjust enrichment claims can usually be avoided from the outset with careful family planning through cohabitation agreements and other legal contracts. For more information about this subject listen to our program:
«Protecting Your Finances: Marriage Contracts and Cohabitation Agreement (“prenupts”)» http://www.familylawinabox.com/info/study_box.php
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