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5h ago
, The Canadian Press
In the five years Chloe Bow and her ex-partner were in a common-law relationship, they only had one conversation about what a break up would mean for them financially.
When they parted ways, the biggest sticking point was the condo they bought together in downtown Toronto, where she paid 30 per cent of the down payment.
“We split the mortgage payments based on our income and what I was able to afford because he had a way higher salary than I did,” the 29-year-old said.
Ultimately, lawyers had to get involved.
At a basic level, common-law status means you are living with your partner but are not married.
It doesn’t require a legal document, but certain protections come into effect based on factors such as the length of co-habitation, the building of intimacy and emotional ties to one another, joint ownership of possessions, naming one another as beneficiaries on insurance policies, and financially supporting one another — a relationship similar to that of a married couple.
For federal tax purposes, common-law status refers to couples who have been living together for 12 consecutive months or who share a child by birth or adoption. But it is important to remember that each province manages legislation for common-law relationships differently.
The number of common-law couples in Canada has been on the rise for years. There were 3.9 million people age 15 and older living with their common-law partner in 2021, according to the latest census dataregarding marital status, up from 3.5 million in 2016. Quebec has the highest number of people with common-law status, at 1.7 million.
And with the number rising, experts say more thorough discussions and planning needs to happen,with people asking themselves how common-law status might affect their future assets, or what it means financially if the couple part ways.
Financial planner Jackie Porter said the couple should decide ahead of time what each partner would be entitled to from a financial perspective based on assets brought into the relationship — and document it. She said this may help to alleviate problems later if the relationship doesn’t work out or there’s a death.
People need to have conversations about their individual financial circumstances as well, she added.
“Working out details may not be a pleasant conversation for most people but an important discussion to ensure both parties are protected … because a common-law breakup has the potential to hurt someone financially worse than a divorce could,” she said.
If there’s a breakup, you may not be legally entitled to assets like property unless you can prove you contributed to it, for example. Breaking up can be a costly endeavour if expectations are not set around what potential financial support would look like as well, Porter noted.
After a year-long legal battle over their shared condo, Bow said she ended up settling despite her lawyer advising her not to.
“It was an interesting scenario because both of our lawyers were saying different things,” she said.
“He was only offering to give me back the initial investment into the condo not considering that we had lived there and it had increased in value.
They finally increased their offer marginally, and I said, ‘You know what, I just want this over with and to move on so I’m going to accept it.”‘
Sydney Bunting, a lawyer at JJ Integrative Family Law LLP, said property rights in the context of common-law relationships is one of the most common topics at her firm.
And there are pretty big differences across provinces.
In Ontario for example, common-law couples are not legally required to share in the value of the property acquired during the relationship. In British Columbia, on the other hand, the default is that property acquired during the relationship is shared equally.
Bunting said one typical scenario she sees that tends to cause tension involves one party owning a property, their romantic partner moving in and there being a very informal arrangement where he or she is paying a couple thousand dollars a month toward the property.
“But if you do that over eight years, let’s say, a lot of times people then separate and it’s like, ‘well, I’ve been paying down that person’s mortgage for eight years and have nothing to show for it, because I kind of understood that this is our house, even though my name’s not on the title,”‘ she said.
In British Columbia, the non-titled partner would have a claim to the growth in the property value over the course of the relationship, Bunting explained, whereas in Ontario, the non-titled partner would have to establish a “trust claim,”which is an attempt to show that the non-titled partner’s contributions have enriched the other while depriving the non-titled partner.
“(The latter) is much harder to do, and the onus is on the claimant,” Bunting added. “So you have to show a court that ‘We understood that we were building a financial future together.”‘
Financially speaking, when comparing marriage to common-law, Bunting said the benefits and risks depend on your role in the relationship.
“If you’re the person that’s going to stay home to raise kids, not pursuing your own career because you understand that there’s a joint family effort happening here, there are protections and rights that marriage offers that common-law doesn’t,” she said.
Looking back, Bow said she wishes she had a bigger discussion about assets.
She also wishes unpaid labour — something she said she really took on while in the relationship — was valued more by society.
“We were able to buy the condo that we did because of him but my contributions to the relationship also enabled him to go to work and get that big job, not that I was solely responsible for it, but I maintained the house, I did the cooking and the cleaning and organized our lives,” she said.
In the end, however, Bow has been able to grow from the experience.
“When I got bought out, that money was really helpful for me. It allowed me to actually leave my job and pursue self-employment and gave me a bit of a nest egg in terms of how I can enhance my life in other ways.”
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