New Legislation Guiding Common-law Property Division

Along with the New Year come some significant changes to the laws directing how people in common-law partnerships (also known as Adult Interdependent partners in Alberta) divide their property upon the breakdown of their relationship. Right now, the law around common-law property division is underdeveloped and often confusing and relies on an old legal theory called unjust enrichment. This  places unmarried couples at a disadvantage to married couples when it comes to knowing your rights and entitlements to share in property, including the family home, cars, RRSPs, pensions and so forth.

On January 1, 2020, the new Family Property Act will replace the Matrimonial Property Act, introducing some important changes to the rights of common-law couples. Adult interdependent partners will no longer have to rely on unjust enrichment to seek an interest in property, usually through a costly dispute in court. The Family Property Act gives unmarried couples the same rights as married couples and will make property disputes between common-law partners easier and more predictable to resolve.

These changes will affect you if you are in an “adult interdependent partnership,” meaning that you have:

a)      lived with the other person in a relationship of interdependence for a continuous period of 3 years or more,

b)      lived with the other person in a relationship of some permanence for less than three years if you have had a child together, including through adoption, or

c)       signed an adult interdependent partnership agreement with the other person.

Although many common-law couples intend their relationship work just like a legal marriage, many couples intentionally decide not to marry their partner in order to avoid having to share their property under the Matrimonial Property Act if their relationship ends. It is important to be aware of how this new legislation will affect your rights and entitlements.

Equal division of property owned by one or both partners

Under the new rules, people in a common-law relationship will generally be entitled to keep the things they owned going into the relationship, as well as certain other kinds of property – including gifts, inheritances and court awards – that they get during their relationship. What the couple will be required to share is:

a)      any increase in the value of their separate property since they started their adult interdependent relationship, and

b)      the things they buy since starting their adult interdependent relationship, including the family home, cars, RRSPs, pensions and so forth.

Claims to share property that go to court must be made within two years of separation or becoming “former adult interdependent partners.” Claims about the division of property can also be resolved through mediation, collaborative negotiation and arbitration, all of which are usually much cheaper and quicker than going to court.

Compensation paid to your partner or former partner

An order or agreement dividing property between yourself and your former partner could result in requirements for you to:

a)      pay money or transfer an interest in property to your former partner,

b)      sell property and divide the proceeds,

c)       pay money to your former partner over a period of time,

d)      ensure payments are made by charging them against property, or

e)      surrender all claims to property in the name of your former partner.

Consulting a Lawyer

In light of the changes coming to the Matrimonial Property Act, to be renamed the Family Property Act, on January 1, 2020, the importance of an agreement defining your rights and obligations if your unmarried relationship ends, cannot be stressed enough. This is particularly true if you decided not to get married to avoid the property rules that apply to married couples.

A cohabitation or living-together agreement can be instrumental in protecting property you acquire during the relationship, the value of your pension or retirement account contributions, and your household goods. These agreements can help safeguard you from having to pay compensation, sell your house, or be evicted from your home upon the breakdown of the relationship. Consulting with a family law lawyer will ensure that your rights align with your intentions if your common-law relationship ends on or after January 1, 2020.

Speak to one of the experienced lawyers at Wise Schieble Barkauskas if you have any questions about the coming changes to the rules on property or if you are interested in preparing a cohabitation or prenuptial agreement.