Money: For unmarried couples, splitting the house on separation is no sure thing - PressFrom - Canada
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MoneyFor unmarried couples, splitting the house on separation is no sure thing

07:05  13 march  2019
07:05  13 march  2019 Source:   financialpost.com

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Exceptions include unmarried couples living in a state that recognizes common law marriage who qualify under their state rules, or those who Where it’s established that an unmarried couple ’s assets are jointly owned (for example, when both names are on a deed), the assets are considered to

Home > Separation for Unmarried Couples . Unmarried couples in a long-term relationship likely have many of the same shared dreams, goals, and possessions as married couples , but are left without the same legal protections if they separate . What happens to the house and other assets?

For unmarried couples, splitting the house on separation is no sure thing© Provided by PostMedia Digital property

In the eyes of an Ontario family law lawyer, one of the most significant consequences of marriage is the sharing of property regime that will apply in the event of separation. In other words, when married spouses separate, they will share the wealth they accumulated during the marriage through “equalization of net family property” in accordance with Ontario’s Family Law Act.

Equalization of net family property does not, however, apply to unmarried spouses in Ontario. In fact, there is no legislated sharing of property for Ontario couples who chose not to get married. In the event of a separation, an unmarried spouse must look to equitable, yet uncertain, principles such as unjust enrichment and resulting trust to correct any financial inequities between the separated spouses that arise in the context of their separation.

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The following are some things unmarried couples should keep in mind regarding their property. If a house is bought in joint names (either as joint tenants or as tenants-in-common) the division may be straightforward and the house should be split 50/50 on separation .

Who Gets the House When an Unmarried Couple Splits Up? Pull together all the financial, housing , and other details of your separation in one final settlement agreement.

That is precisely what happened in a recent case in which the Ontario Courts were called upon to resolve the property issues between a separated, unmarried couple. In GMC v. AMF, Justice Gordon was asked to decide how the proceeds from the sale of a jointly owned home should be decided following a relatively short relationship of either two or five years (the couple did not agree on the date their cohabitation commenced).

When the couple purchased the house, GMC contributed $116,000, which funds were proceeds from the sale of his previous home. AMF contributed only $5,000. The purchase price of the property was $570,000 in July, 2014. Shortly after the couple’s separation, the property was sold for $652,000 in December, 2016. Over the course of approximately two years, the value of the property had increased by $82,000.

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Property Issues for Unmarried Couples . Remember that in just about every state, having both names on the deed to the house creates a legal presumption that you are 50-50 owners, and anyone claiming a different percentage has to prove the existence of an agreement saying so (often in writing).

Financial issues for unmarried couples can get complicated. They can meet most of these challenges with proper planning and some expert guidance. You put your heart into your live-in relationship, but you didn't put your name on a marriage license. Now, you and your partner have separated .

Notwithstanding the property was owned jointly, GMC took the position that he was entitled to all of the sale proceeds (net of the mortgage, line of credit and other expenses) as a consequence of his significantly greater contribution to the purchase. It was his position that he did not gift AMF one-half of the $116,000 he contributed to the home when it was purchased. Rather, AMF held one-half of the property in trust for him. AMF disagreed, taking the position she was entitled to half of the proceeds since the property was jointly owned.

Justice Gordon begins his analysis by acknowledging that the couple in this case are unmarried. He goes on to note that:

“Accordingly, the property provisions in the Family Law Act do not apply. Instead, in cases involving gratuitous transfers, or unequal contributions as here, the principles of trust law from the common law apply. These principles were developed long ago to resolve commercial or financial disputes. Application of same to domestic relationships is far more complex and not always with a satisfactory result. However, in the absence of legislation, it is all we have.”

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Property Issues for Unmarried Couples . To help assure your landlord’s approval, make sure your partner will meet your landlord’s good-tenant criteria in Also, the article Who Gets the Apartment When an Unmarried Couple Splits Up? discusses the impact of a separation on your rental housing .

Any unmarried couple that plans to jointly own a house or other real property should prepare a written contract. When it comes to an investment of this size, it’s just plain nuts to try and wing it with pillow talk. If, later, your relationship becomes rocky, your memories of the details of a spoken agreement may

Justice Gordon examined the somewhat imperfect and conflicting evidence surrounding the purchase of the property. In the result, Justice Gordon concluded that GMC never intended to gift his contribution to the property to AMF. It followed that AMF held GMC’s share in trust for GMC. Each party was therefore entitled to the return of their initial investment in the property, with GMC receiving $116,000 and AMF receiving $5,000. GMC agreed that the increase in the market value of the property should be shared equally between the parties.

Unhappy with the decision, AMF appealed to the Court of Appeal for Ontario. AMF’s appeal was heard on Feb 4, 2019. In short order, the Court of Appeal dismissed the appeal and ordered AMF to pay costs to GMC in the amount of $12,500.

In the absence of a legislated property sharing regime for unmarried couples in Ontario, great uncertainty inevitably arises. The separated unmarried couple often looks to the court to resolve the financial issues between them. The cost of resolving the issues through litigation can eclipse the value of the benefit, as was likely the case in GMC v. AMF. The resolution of these issues also comes at a significant cost to the public, including the use of judicial resources to resolve disputes that arise, in large part, due to the absence of legislation.

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Because unmarried couples don’t get divorces, judges and lawyers aren’t necessarily involved in Unmarried couples can make their own parenting agreements covering child support, custody, and Be sure you both date and sign any agreement you reach and each keep a copy. It’s a good idea to

On separation , unmarried are not able to claim maintenance from each other as in the case of a married couple . However, if there are children then The views expressed in the contents above are those of our users and do not necessarily reflect the views of MailOnline. We are no longer accepting

Many provinces and territories across Canada have implemented legislation that squarely deals with sharing of property for unmarried couples. Most recently, in late 2018 the Alberta legislature passed Bill 28 which amended Alberta’s Matrimonial Property Act to include “adult interdependent partners” in the sharing of property regime that previously only applied to married spouses. Adult interdependent partners include any two persons in a relationship outside of marriage who (i) share one another’s lives, (ii) are emotionally committed to one another, and (iii) function as an economic and domestic unit.

Many believe that this legislative reform will bring certainty to the resolution of the financial issues arising from the separation of unmarried spouses. That said, such legislation will close the door for people who choose not to marry in order to avoid the sharing of property that arises as a consequence of marriage. People making that choice, however, likely do not appreciate the exposure, albeit uncertain, that exists through the availability of equitable remedies.

Couples entering into a relationship of any permanence, be it through marriage or unmarried cohabitation, need to understand their future rights and obligations in respect of the sharing of property. In the absence of legislation, or in the presence of legislation that does not align with a couple’s intentions, domestic contracts, such as a marriage contract or cohabitation agreement, may be the most practical solution to ensure certainty in the unfortunate event of separation.

Adam N. Black is a partner in the family law group at Torkin Manes LLP in Toronto.

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