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We're not married. What happens to our property and debts if we separate?

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We're not married. What happens to our property and debts if we separate?

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Reviewed: 
September, 2015
Answer

The rules about how you divide your property depend on whether you're married or in a common-law relationship.

Married couples usually share the value of their property if they separate or divorce. This is not true for common-law couples, who have different rights.

Property

Usually, each common-law partner keeps:

  • the property they had when they started the relationship
  • the property they got while they were living with their partner

They only have to share the property they own together.

For example, say when you separate from your partner you have $1,000 in your bank account and $4,000 in a joint bank account with your partner. You keep all of the $1,000 in your bank account and half of the money, or $2,000, in the joint bank account.

Some property isn't easy to divide so you share the value of the property instead of the property itself. For example, say you have a jointly owned car. You can buy the car from your partner by paying them the value of half the car. Or you can sell the car and split the money.

Exceptions

But you can make a claim to your partner's property in some situations.

The most common example is by proving an "unjust enrichment". This means that it would be unfair to allow your partner to leave the relationship without sharing their property.

To make this claim, you have to show that:

  • you contributed to the property,
  • your partner benefited from your contribution, and
  • there is no reason for your partner to keep this benefit.

Another claim a common-law partner can make is that their partner is holding property through a "resulting trust". This means that the property is in your partner's name but is really your property.

Claims based on unjust enrichment and resulting trust can be very hard to prove.

Debts

Usually, you are responsible for repaying your debts, and your partner is responsible for theirs, unless you have an agreement saying who is responsible for which debts.

You're both responsible for repaying a debt if you signed a loan agreement together. This is true for any two people who sign a loan together, whether or not they're married. Even if you didn't benefit from the loan, you might have to repay it, if your partner doesn't pay.

Making an agreement

You and your partner can make a separation agreement that says what happens to your property after you separate.

Some people divide property by applying the rules of a cohabitation agreement that was signed before they separated.

Time limit

If you and your partner can't agree, you can ask the court to make an order to divide your property.

The usual time limit to make a claim for a share in property that is not real estate, such as for a share in your common-law partner's business or car, is 2 years after separation.

The usual time limit to make a claim for a share in real estate property, such as for a share in a house or farm property, is 10 years after you separate.

Sometimes a court extends the time you have to make a claim.

There are 3 courts that deal with family law issues in Ontario. But only 2 can deal with property issues – the Superior Court of Justice and the Family Court branch of the Superior Court of Justice. The Ontario Court of Justice cannot divide property.

In some cases where there is no Family Court branch of the Superior Court of Justice, you may have to start your case in Small Claims Court if you are asking for money or property that is worth $25,000 or less.

Check if you have a cohabitation agreement

You may have a cohabitation agreement that says how you and your partner divide your assets and debts after you separate.

If one of you no longer wants to follow this agreement, that person may ask the court for an order to set aside the cohabitation agreement. This means the court allows you not to follow all or part of the agreement.

But the other person can ask the court to make an order that divides your property in the way you agreed to in your agreement.

The courts encourage people to decide their issues on their own. So if you have an agreement, the courts won't set aside your agreement easily.

Reviewed: 
October, 2016
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Decide how to deal with jointly owned property and debts

You and your partner can make a list of all your jointly owned property, sometimes called assets, and all your joint debts.

Dividing joint assets

Assets, sometimes called property, include your:

  • home and any other real estate
  • car
  • personal items of value such as jewellery or artwork
  • household items such as furniture, appliances, and electronic equipment
  • bank accounts, RRSPs, and any other financial investments
  • insurance policies
  • pensions
  • businesses

You might be the only owner of some assets. For example, you own all the money in a bank account that is only in your name. And you own a car that is registered in only your name.

You might be a joint owner of other assets. For example, you only own half of the money in a joint bank account that is in you and your partner's names. Your partner owns the other half. If you own a home jointly, you might own half or you might own a different proportion of the home. It depends on what title to your home says.

Some things are easier to divide than others. A bank account can easily be divided by each of you taking half the amount.

Many couples agree on how to divide things in their home.. For example, you could make a list of things and take turns picking what you want to take with you. This may include things like couches, lamps, and televisions.

Other property is more complicated. For example, you and your partner have to decide if one of you wants to buy the other person's share of your home, or if it should be listed for sale. If one of you buys out the other person's share, you have to decide how much to pay.

Dividing pension credits

The Canada Pension Plan (CPP) is a type of pension that most workers and employers contribute to. You earn CPP credits as you work. When you retire or can't work because of a disability, you can apply to get pension payments.

You or your partner can apply directly to Service Canada to divide CPP contributions that were made during the time both of you lived together. You must have lived with your partner for at least one year to apply.

You don't have any special rights to divide other types of pensions, for example, an employer's pension. But there are also special rules about how to divide a pension if you and your common-law partner agree or you have a court order to divide the pension.

Dividing joint debts

Debts include your:

  • unpaid bills, including credit card bills
  • student loans
  • lines of credit
  • loans
  • mortgage

If you have a joint debt, you may have to repay the entire joint debt if your partner doesn't pay their share. You and your partner should try to make a separation agreement about how to divide joint debts.

Reviewed: 
October, 2016
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Think about whether to make an unjust enrichment claim

Since common-law partners usually don't get a share of each other’s property, you have to prove why you should be given a share.

A claim based on unjust enrichment means that it would be unfair to allow your partner to leave the relationship without sharing their property. This can be very hard to prove.

To make this claim, you have to show that:

  • you contributed to the property,
  • your partner benefited from your contribution, and
  • there is no reason for your partner to keep this benefit.

You may have made a direct contribution to the property. Some examples include:

  • you paid for a new roof on a house owned by your partner
  • you built a deck on a house owned by your partner
  • you managed all the bookkeeping for your partner's business
  • you cared for the children and home which allowed your partner to spend time and money growing their business
  • you paid all the household bills and your partner put all their money into savings

You may have made an indirect contribution to the property. Some examples include:

  • you cared for the children and home which allowed your partner to spend time and money growing their business
  • you paid all the household bills and your partner put all their money into savings

If you can show an unjust enrichment claim, you don’t always get half of the value of the property. The law considers what your fair share would be.

Usually this can be paid by money. Sometimes if money is not enough, you can be given a direct interest in the property you contributed to. For example, the court can order that you own one-third of the house and your partner owns the other two-thirds.

Reviewed: 
September, 2016
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4. Think about whether to make a resulting trust claim

A claim based on a resulting trust means that the property is in your partner’s name but is really your property. This might be found where:

  • you gave property to your partner that they didn't pay for, or
  • property was purchased in only your partner's name but you contributed to buying the property

For example, you transferred half of your home to your partner but they did not pay you for it. Or you and your partner both contributed to the down payment of a house but it was put in only your partner's name.

To find a resulting trust over a piece of property, the court must find that you meant for your partner to hold the property "in trust" for you, and not that you meant to make a gift to your partner. This can be very hard to prove.

You can talk to a lawyer who can tell you whether you have a good claim for unjust enrichment or a resulting trust, and help you through the court process.

If you can't afford to hire a lawyer for your whole case, some lawyers will provide "unbundled" or "limited scope" services. This means you pay them to help you with part of your case.

If you can't afford to hire a lawyer, you may be able to find legal help in other places.

Legal Aid doesn't usually help with property issues. But it may cover the cost of up to 10 hours with a family lawyer to help negotiate and draft a separation agreement that includes property issues.

Reviewed: 
February, 2017
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