Sunday, 17 December 2017

Love Can Put Real Estate at Risk in Canada

Written by Posted On Tuesday, 17 December 2002 00:00

Whether you get married or not, Canadian law may govern the disposition of property if your relationship fails. When you enter into a personal relationship owning real estate, don’t automatically assume you’ll leave with your property intact if things don’t work out love-wise.

Editor’s note: The following information, condensed from an Ontario Ministry of the Attorney General publication, is not intended as legal advice, nor will all the details provided here be directly applicable in all of our ten provinces and three territories. This should, however, get you thinking and give you some context for making inquiries relevant to your situation.

When you get married in Canada, the law treats your marriage as an equal economic partnership. If your marriage ends, the value of property acquired during the marriage and the increase in value of any property brought into the marriage will usually be divided in half and shared between the spouses regardless of who contributed more money or labour, or who is to blame for ending the relationship. A few types of property are excluded from this division:

  • gifts received during the marriage from someone other than your spouse
  • property inherited during the marriage
  • money received from an insurance company because someone died
  • money that you got or will get as a result of a personal injury like a car accident.

In spite of any division of property, family law provides that each spouse has an equal right to stay in the family home, unless a judge decides that one must move out. Since both spouses have a right to stay, neither can sublet the home, rent it out, sell it or mortgage it without the other’s permission. This is true even if your lease is in only one name or if only one of you owns the home. If you separate, you’ll have to agree on who stays and who goes, or go to court to have a judge decide.

Marriage contracts are used by couples who feel that the law does not fully cover their arrangement. In these contracts, each party explains what they expect from the other and what will happen to any property that was owned before the marriage. Property does not have to be divided equally, but you cannot contract out of the law that states a wife and husband have an equal right to live in their home.

If you live with someone without being married, you are said to be living in a common law relationship or cohabiting. In 1999, the Supreme Court of Canada decided that people who live together in a same sex relationship have the same rights and obligations as opposite sex common law couples.

However, common law couples do not have the same rights as married couples when it comes to sharing property bought while they were living together. Usually, furniture and other property belong to the person who purchased them. These couples do not have the right to divide between them the increase in value of the property they brought with them into the relationship and do not automatically have an equal right to stay in the home. Problems may also arise if one partner contributed to the property owned by the other. That partner may have to pay back the other or contest the contributions in court.

Common law couples may sign a cohabitation agreement to protect their rights. This agreement outlines financial and family responsibilities, who will own the things bought together and how property will be divided if the relationship ends. This agreement will be binding on both parties so independent legal advice is essential.

If common law couples decide to separate, they may create a separation agreement similar to that used by married couples. Again, independent legal advice is advised whether it is marriage or cohabitation that is being dissolved.

Although the law provides for property disposition to the surviving spouse if a married spouse dies without a will, should a common law partner die without a will any property in their name will go to blood relatives in a succession order set down in law. A common law surviving partner will have to prove the claim in court to gain a rightful share of the estate.

Remember, that this is only an outline of the general rules affecting real estate and relationships. The legal rules governing your property and relationship may be complicated. Consult a lawyer to understand how the laws and rules apply in your love match.

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