In Alberta, adult interdependent partners, or to use a phrase people are more familiar with, “common law” couples, now have similar protections to married couples when it comes to property division when their relationship breaks down. These are generally couples who have lived together in a “relationship of interdependence” for at least three years, or for a shorter period of time if they have children together, or couples who have chosen to sign an “adult interdependent partner agreement”.
On January 1, 2020 the new Alberta Family Property Act came into force and brought with it a sweeping change to the law which gave these types of couples specific rights to property division rights. You can find a brief primer on the Family Property Act and how it may affect you here.
But what happens when adult interdependent partners separate, and one of them (or both of them) jointly own a home? Or if just one of them owns the home which they both lived in during the relationship? The answer may be complicated, and we recommend you reach out to one of our Edmonton Family Law Practice Group lawyers to better advise you on your personal circumstances. This article is meant only for basic legal information, and it is not to be considered legal advice.
Here are two possible scenarios, explained simply:
- Partner A purchased their home before the relationship began, and Partner B moved in. Partner B does not have their name on the title to the house, but the parties lived there together for 10 years. The house increased in value, from $20,000 when they moved in together to $100,000 when the relationship ended years later.
- In this case, the value of the house equity at the time of moving in together (the $20,000) may be “exempt” and Partner A can keep that amount for themselves, however, the $80,000 increase in value of the home over the years of the relationship may have to be shared with Partner B, even though Partner B, even though Partner B does not have their name listed on title as an “owner” of the house.
- This will also apply to the value of other assets that Partner A or Partner B had at the time they moved in together, such as investment accounts, other real property like houses or cabins, or other valuable personal property.
- Partner A and Partner B decide to purchase a house together before moving in together for the first time. They each contribute 50% of the down payment ($20,000 each) to buy their dream home. Several years later, the house is worth $100,000. Now, according to the Family Property Act, the equity or value in this home would be divided equally. There may be some consideration for each person to receive 50% of their initial down payment back first, and then divide the rest equally. This is generally the case even if one of the partners was the only one paying for the mortgage and other expenses for the house. The Family Property Act does not consider “who paid for what” for this kind of property that is obtained during the relationship.
It is very important that people seek out legal advice early, and that they consider entering into a cohabitation agreement if they wish to protect assets they may have owned before moving in with a new partner. If no prior agreement is reached between the parties with independent legal advice from lawyers, then the legislation will apply if the relationship ends, whether people want it to or not. It may be too late by then to have a former partner agree to waive their rights they have to the other’s property.
What about if Partner A decides to sell the house they own in their own name without sharing any of the proceeds with Partner B?
In Scenario 1 above, an issue of concern is that Partner A, after the relationship ends, may want to sell the house. Since Partner B is not identified as an “owner” of the house and their name is not on the title, Partner A does not have to get their permission before selling, in the way that two people would have to if they were both named on title to the house as joint owners.
If the partners above were legally married, a piece of legislation going back over 100 years and still in force in Alberta called the Dower Act applies to them. Dower prevents any owner of a “homestead” (today’s home) from selling or mortgaging the property without first getting the written permission and consent of their spouse. The legislation also has some other protections for the spouse such as the right to live in the house. This applies whether or not the spouse has their name on the title or not. The Dower Act only applies to married spouses, and so adult interdependent partners or common law partners are not protected by this historic legislation.
This means that a non-married, adult interdependent or “common law” partner who is not listed as an owner to the family home could potentially face a situation where their former partner tries to sell or mortgage the valuable property without their consent, and perhaps keep or spend the proceeds from the sale for themselves. They simply would need to swear an affidavit saying they are not married to prove that the Dower Act does not apply to them, without the need to disclose the common law relationship as part of the land sale.
What can you do if you are in this situation?
There are legal actions that people can take to protect their rights, such as filing a lawsuit under the Family Property Act to fairly divide property, and other important steps that can be taken immediately to protect their rights and interests, which should be done with the advice of a lawyer. There are options as well such as bringing a court application to prevent certain steps from taking place, registering at the Land Titles Office, and engaging in negotiations, mediation or other forms of dispute resolution.
Don’t hesitate! The Family Property Act has time deadlines to claim rights under it through a court action. At the most an adult interdependent partner has three years from separation to bring a claim, but only one year from the sale or transfer by the other partner of property like the family home.
We strongly recommend you reach out to one of our Edmonton Family Law Practice Group members for advice if you think something like this could happen or is happening to you (time is of the essence!), or if you are separating from your common law partner and one or both of you own property in your name.
This article was written by Megan Dawson. Megan Dawson is a lawyer at McCuaig Desrochers LLP, and practices in the areas of Family Law.
©2020 McCuaig Desrochers LLP. All rights reserved. The content of this newsletter is intended to provide general information on McCuaig Desrochers LLP, our lawyers, and recent developments in the law and is not to be relied on as legal advice or opinion.