This is the time of year that a lot of people get married. Congratulations to all that are making this big commitment. For those of you that have shied away from the legal part of your commitment but have decided to set up house together, beware.
I hear many people say ‘what’s in a piece of paper’? After two years of living together we are legally married in the eyes of the law. Well if you are one of those people that are playing house and believing you have the same rights as a couple that have legally tied the knot, then you would be wrong if you live in Ontario.
Now I know you don’t get into a relationship and think that it may come apart. In actual fact, 50% of relationships end after a period of time. In a common law relationship you may have believed you have the same entitlements as your married friends that split up only to find out very quickly how much you have to lose because the rules are different. While there are some similarities, you need to know the rules that don’t apply in a common law relationship.
The basic rule in Ontario is when a common law couple separate, each person keeps what belongs to them. For instance a house that is in your name, car, bank account, or furniture that you purchased, you get to keep. Also each person is responsible for their own debt. It is best to keep receipts for anything you purchase, just in case. You don’t want to pay a lawyer to get something back when there is no proof of who purchased what.
If an asset is in both your names then you are each entitled to half its value. You will need to decide between you how to deal with the property. If either one is going to buy the other person out or will the property be sold and the proceeds be divided equally. If you cannot come to an agreement the courts can decide for you.
In any case, know your rights and consider getting a cohabitation agreement drawn up by your lawyer. Don’t assume you know the law. There is no simple formula to describe how property is divided upon common law separation in Canada. The law in this area is complex and unsettled. If you find out after the fact it could cost you big time. Just some legal food for thought.