It is often believed that a couple who has lived together for a long period of time without ever getting married, also referred to as common law spouses, are treated the same as married couples by the Courts. In Ontario, this is not the case. The issue arises when individuals do not understand the legal difference between the two and expect equity upon separation. In reality, the division of common law property following separation is actually more complex.
In Ontario, married couples are entitled to equalization after separation. Just to clarify, equalization is the process wherein the party with the greater Net Family Property (assets minus all debts) pays the party with the lesser Net Family Property one half of the difference. This is governed by Section 5(1) of the Family Law Act. For example, if a married couple has been together for 10 years and bought a house together at some point during their marriage, that home is automatically subject to equalization upon separation.
On the contrary, common law spouses are not entitled to equalization, regardless of how long they’ve been together or how long they’ve lived together. For example, if an individual were to purchase a home while living in a 10 year common law relationship, their spouse is not automatically entitled to half of the home’s value upon separation. Now, this is where things get complicated. If you take the same example, but the other common law spouse financially contributes to maintaining or renovating the home, he/she may make a trust claim – that is, he or she may claim that their spouse was simply holding their share of the home in trust – and may seek financial compensation for their “share”. It is often difficult and expensive to make such claims, but it is possible.
This concept ties into my next point. In family law proceedings dealing with separation, it is common for parties to rely on the Divorce Act to justify their sought relief. However, it is important to note that the Divorce Act does not apply to common law spouses. It is because of this point that I am seeing more common law couples enter into cohabitation agreements to protect themselves where they aren’t afforded that right under the law.
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