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Common Law Separation Agreement in Ontario

Firstly, it is important know when you are considered Common Law in Ontario? 

Common Law relationship is established if two people have been living together in a conjugal (marriage like) relationship for a minimum of three years. 

In other words, you become a common law partner in Ontario if two people have cohabitated for a minimum of three years. As per the Family Law Act R.S.O. 1990, c. F. 3, section 1(1), the general Definitions of “cohabit” means “to live together in a conjugal relationship, whether within or outside of marriage”.

Alternatively

You can also become Common Law Partner in Ontario if you have a child together (biological or adopted).

In this article we will be discussing 3 Mistakes Common Law in Ontario must Avoid to protect their interest in the event break up and upon entering into a Common Law Separation Agreement Ontario.

Mistake No. 1
Presumption of Equal Division of Property

As a Common Law Partner you are not automatically entitled to half of the property. The Family Law Act R.S.O. 1990, c. F. 3 section 1(1) relating to equalization of net family property only applies to married couples. Therefore, it is a mistake to assume you are automatically entitled to half of the assets accumulated during the course of the relationship.

Hence, any asset acquired during the course of the relationship under individual name shall remain the property of the individual and will not be subject to automatic equalization.

Similarly, a common law partner does not have any right to inheritance if the other parties dies, unless the common law partner is listed as a beneficiary in the Will.

Common Law Property Division

As a common Law Partner you are entitled to claim for any contribution either financial or non-financial made towards the property. This means as a common law in Ontario you cannot claim equal division of property but you can seek  compensation for your contributions made towards acquiring an asset, which could possibly be less than equal division.  

The legal principle for division of assets for common law are governed under the laws of equity. Three Equitable principles apply to Common Law Relationships.

  1. Resulting Trust
  2. Constructive Trust
  3. Unjust Enrichment.

Resulting Trust

A Resulting or Constructive Trust are legal principles of law applicable where someone may have a share in a property when the legal title is registered under the sole name of other partner.

A Resulting Trust situation would arise if one party contributed towards the down payment of the house but was not on title as owner of the house. An example would be where Partner “A” paid $150,000.00 and Partner “B” paid $50,000.00 towards a $200,000.00 down payment for a purchase of a house in the name of Partner “A”. In the event of Separation Partner “B” could only claim $50,000.00 contribution made toward the purchase of the house.  It is important to note that the even though such contribution was made by Partner “A”, the presumption was rebuttable. 

The Resulting Trust presumption would only arise if it could be established through clear evidence that the intention for the contribution was for Partner “A” to hold the title on trust on behalf of Partner “B” in light of the contributions made.

Constructive Trust

A constructive trust situation would arise where one partner has contributed towards the value of the property. The principles applicable to constructive trust are more complex. In simple language if Partner “B” made payments towards the mortgage instalments, or made payments for a substantial improvement to the property, such as home renovations then the presumption of constructive trust would arise. This is to be distinguished from a situation where partner B only contributes towards grocery and household expenses.

In courts opinion it would be unusual for someone to pay another mortgage or pay for home renovations with no financial again as oppose to paying for grocery.

Unjust Enrichment

An unjust enrichment situation would arise where one partner may have sacrificed his/her career to look after the children to help the other partner grown in his/her business or work. In essences one partner financially benefited from the efforts of the other partner. The difficulty with unjust enrichment is quantification of benefit and loss. It is difficult to quantify the compensation for common law partner.   

Mistake No. 2
Common Law Do Not have to Pay Spousal Support

It is common misconception that as common law in Ontario do not have to pay spousal support, since your common law partner is not your spouse. Right? In Ontario spouse and common law partners are considered equal for spousal support purposes and therefore principles of spousal support equally applies to common law partners as well. The principles of spousal support is a sharp contras with division of property for common law partners, since automatic equal division not available for common law partners, hence the confusion among people.

 

Before calculating spousal support the court will take into consideration the income of both parties, assets of both parties, age, health, standard of living while you were in a relationship, ability to become self – sufficient, contributions made to assist the other partner excel in his/her career (principles of unjust enrichment) as well as hardship that suffered by one partner due to breakdown of the relationship. Therefore a common law separation agreement Ontario would include provisions for Support.

Mistake No. 3
Do Not have a Cohabitation Agreement

It is a huge mistake if you do not have a cohabitation agreement to protect your rights as a common law partner.  The Family Law Act R.S.O. 1990, c. F. 3 recognizes domestic contracts therefore all agreements such as prenuptial Agreement or marriage contract, including cohabitation agreement was recognised as valid in the eyes of law.

A cohabitation Agreement is negotiated between the parties and can settle all rights and obligations of common law partners. It provides clarity as to individual rights and liabilities as well as certainty in the unlikely event of a Separation.

When parties choose not to enter into a Cohabitation Agreement,  in the event of a separation they are struggling to either enter into a common law separation agreement Ontario or litigate their rights in court. Litigation is costly and proving division of property would cost parties from a minimum of $6,000 to $15,000 for a simple matter.

It is recommended to speak to a family lawyer who specializes in common law partners and discuss the option for having a cohabitation agreement signed as soon as possible.

How Long Do You Have To Live Together To Be Common Law In Canada

It is important to note that Divorce Act does not apply to unmarried couples. Therefore, every Province and Territory has made Laws/ Requirements pertaining to Common Law couples. We have prepared a short list of all Provinces & Territories with requirement to help you understand how long do you have to live together to be common law in Canada?

Province/Territory Requirements
Alberta Cohabit for 3 years in a marriage like relationship or have a child or have a common law partnership agreement registered. The common law partner in Alberta is referred as Adult Interdependent partner.
British Columbia Cohabit for 2 years in a marriage-like relationship.
Manitoba Cohabit for 3 years or have a child or have registered the common law relationship.
New Brunswick Cohabit for 3 years or have a child or have registered the common law relationship. In a 3 years Cohabitation period one person should be financially dependent for support.
Newfoundland Cohabit for 1 year and have a child together.
Nova Scotia Cohabit for 2 years.
Ontario Cohabit for 3 years, or have a child and in a marriage like relationship.
P.E.I and N.W.T Cohabit for 2 years, or have a child and in a marriage like relationship.
Quebec No prescribed period or time to establish a common law relationship. In Quebec such marriage like relationships are described as “de facto” partners.
Saskatchewan Cohabit for 2 years.
Yukon No prescribed period or time to establish a common law relationship, as long as the partners were living together in a marriage like relationship.

Legal Fees

Cohabitation Agreement
$ 1260 + HST
  • Cohabitation Agreement Consultation
  • Drafting of All Paper Work
  • Independent Legal Advice Certificate
  • Division of Property
  • Spousal Support
  • 5 Revisions included
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