Property - Division of Property

 

For Married Couples

The Family Law Act sets out the rules for dividing property and debt between married couples. There are two ways of dividing property:

  • 50/50 Split – the general principal of the Family Law Act is that both spouses own all the matrimonial assets equally. If you and your spouse cannot agree on how to divide the property, an application can be made to the Court to request a Judge to divide the assets. The Court will normally split the value of the assets equally between both parties.
  • Unequal Division of Property – you can apply for an unequal division of property, but you have to prove that an equal division would be ‘grossly unjust or unfair’.

Couples always have the option of agreeing on how property will be divided in a marriage contract. The Family Law Act (the "Act") will not apply to a married couple if they opted out of the Act through a marriage contract. Couples are advised to seek legal advice with respect to division of property or signing agreements.

What Matrimonial Property is Divided?

Matrimonial Assets

Matrimonial assets include property obtained by either spouse during the marriage, such as furniture, bank accounts, work related benefits (such as pensions, RRSPs) or land used by the family. Note: this list is not exhaustive.

Not all property is considered matrimonial assets. The following are usually not considered matrimonial assets:

  • Gifts, inheritances, settlements or trusts (unless used for a family purpose, or used to buy family assets);
  • Family heirlooms;
  • Personal injury awards (except any portion that compensates for economic loss);
  • Personal possessions;
  • Business assets;
  • Property that is specifically excluded under a marriage contract;
  • Property acquired after separation (separate bank accounts, credit cards, etc.)

Matrimonial Home

The matrimonial home is the home and land that spouses shared together as a family. It could include a house, trailer, mobile home, and condominium.

Under the Family Law Act, both spouses have an equal share of the matrimonial home, regardless of whether it was previously owned by one spouse, how and when it was acquired, or if it was purchased in only one name. Married spouses own the home as joint tenants, which means they both have equal ownership rights to the property and on the death of the other spouse, full ownership of the home.

If a married couple has opted out of the Family Law Act through a marriage contract, this may not apply.

If one spouse moves out, the person who remains in the house is not normally allowed to deny the other access. A spouse can obtain exclusive possession of the family home if:

  • He or she has bought out the other’s interest in the home,
  • There is an order from court for exclusive possession. Either spouse can apply to the court for exclusive possession upon the breakdown of a marriage, or
  • There is a court order which specifically denies one spouse access to the home for a period of time (such as stipulated in an emergency protection order, an undertaking, recognizance or probation order).

For Common Law Couples

You should know that if you separate, you and your partner can choose to enter into a “separation agreement.” The Family Law Act allows common law partners to enter into agreements, which can give you and your partner the option to contract your own terms of separation. In your separation agreement, you and your partner can agree to the same rights as married couples.

If you cannot come to an agreement, the general rules for common law property division are:

  • If you and your partner separate, each person keeps what belongs to them. It is a good idea to keep receipts of what you buy. Later, if you and your partner do not agree on who owns something, you have proof to show that it belongs to you.
  • The property you bring into the relationship, plus any increase in its value, usually continues to belong to you after you separate.
  • Each person is responsible for their own debts.
  • If an asset is in both your names, then normally you are entitled to half of its value. This means that if you separate, the things you owned together will be divided.
  • If your partner dies and did not include you in their estate plan or will, you do not have an automatic right to inherit their property. That includes the home that you lived in together.
  • You can divide Canada Pension Plan credits that were earned while you were living with your partner if you lived together for at least one year. See the Canadian Pension Plan website for more information.

It is possible to make a claim for common law property outside of these rules. For example, you may have a claim to a house even if you do not hold title to the house. You will need to show that you made payments towards the mortgage or made other significant investments to the house. If the court gives you a share of your partner’s property, the size of the share may depend on how much you contributed or how much your contribution increased the value of the property. Like most family law matters, it is always recommended that you get professional legal advice when making a claim.