By: Sean Schaefer and Mark Demas
Albertans in common-law relationships may believe they are not subject to the same property division rules as married couples. They are, thanks to the passage of the Family Property Act (FPA) in 2020 that significantly altered many of the laws governing these relationships.
For example, if you enter a common-law relationship with a property, subject to the exemption rules (covered in a different blog) a portion of the value of that asset may be subject to division when the partnership ends. The same would apply to debts brought into the relationship. These are just two reasons why those entering a common-law relationship with assets should seek legal advice from a family lawyer. Here is a primer of how the legislation will affect you. And keep in mind the FPA does not apply if you were in an adult interdependent relationship and separated before Jan 1, 2020.
The term ‘common law’ is no longer used
The first thing you should know is that the FPA does not describe people as living “common law.” Instead, unmarried people living together are known as adult interdependent partners (AIPs). People qualify as AIPs under the Adult Interdependent Relationships Act if they have:
- lived together in a relationship of interdependence for at least three years;
- a relationship of some permanence and have a child together by birth or adoption; or
- entered into an agreement to be AIPs in accordance with the regulations.
A “relationship of interdependence” is generally defined as a relationship where two people outside of marriage:
- share one another’s lives;
- are emotionally committed to one another; and
- function as a domestic and economic unit.
Factors that determine what is a domestic and economic unit include if they have a conjugal and exclusive relationship, if they financially support the other person and if they share the use and enjoyment of a property.
The FPA does not discriminate between both same-sex and opposite-sex partners who are in a romantic relationship. You also cannot be an AIP if you are already married or in an existing interdependent relationship, or if you are a minor, defined in Alberta as someone under the age of 18.
Property rights under the Act
Prior to 2020, Alberta did not have a specific law dealing with property division for unmarried couples. When disputes arose, judges were left to decide on entitlement based on the common law by referring to previous judgments. Under the FPA, those in adult interdependent relationships now have the same right as married couples to make a claim on property.
Generally speaking, all property acquired after the beginning of a relationship of interdependence will be eligible for inclusion in the court's calculation of assets to be divided. However, certain types of property are exempt, such as property that was owned prior to the relationship of interdependence or was acquired as an inheritance or as a gift from a third party, either before or during the partnership.
The court will also consider factors such as the contribution made by each AIP to the welfare of the family, to property, the earning capacity and financial situation of each partner and the duration of the relationship of interdependence to determine what is an “equitable" division of assets.
Possession of the family home
A significant consequence of the FPA is that a property owned by one or both AIPs or that is used as a residence will be considered a “family home” for the purposes of the legislation. That means its value is subject to division if the relationship ends.
The legislation also allows one partner to apply to have exclusive possession of the family home and to have the other AIP removed from the home and/or restrained from entering the residence. Before 2020, these rights were only available to married couples with respect to a matrimonial home. In addition to a family home being the subject of property division, AIPs can also ask the court to divide pension benefits in the same way as married spouses after separation.
An alternative to the FPA
Just like married couples, AIPs are free to make legally binding agreements regarding the division of their property upon a breakdown of their relationship. To be valid, these agreements must conform with the new FPA. The formalities that must be met are:
- the agreement must be in writing;
- it must be signed separate and apart from the other party;
- each party must obtain legal advice from their own lawyer independent of the other; and
- neither party can be under any duress.
If you do not wish to be caught by the FPA it is wise to enter into an agreement that meets the formalities noted above and outlines your desired result regarding property distribution at the end of a relationship. Of note, the agreement may be invalid if the partners decide to formally marry unless the agreement says otherwise.
Defining the end of the relationship
Under the FPA, “breakdown of the relationship,” is said to have occurred when:
- the AIPs have lived separate and apart for more than one year;
- one of the partners has remarried or taken up residence with someone else;
- they have signed a written agreement saying their relationship is over; or
- one or both get a declaration of irreconcilability under the Family Law Act.
Interdependent relationships on the rise
Statistics Canada reported that in 2021 16.7 percent of Albertans were considered to be living in an adult interdependent relationship. That is more than double from 1981, when 7.9 percent of the population were IPAs.
“When young adults do pair off, living common law is the norm,” Statistics Canada notes. Looking at the whole of Canada, “In 2021, nearly eight in 10 people aged 20 to 24 who were part of a couple (79 percent) were living with a common-law partner. However, living common law is also gaining popularity at older ages, accounting for 16 percent of people aged 55 to 69 in couples, up from 13 percent in 2016.”
StatsCan adds that from 1981 to 2021, the number of common-law couples “increased by 447 percent … still, marriage remains the predominant type of union. In 2021, more than three-quarters (77 percent) of couples were married.”
Call us for assistance
The Family Property Act guides the court when it comes to asset division after a breakdown of an adult interdependent relationship but every legislation is open to interpretation. If you are facing the end of your relationship, or, if you wish to define the terms of separation at the outset of such a relationship, the team at Demas Schaefer Family Lawyers can explain your best options and rights under the FPA. Set up an appointment with one of our experienced family and divorce lawyers today. We offer a free 15-minute telephone or video consultation so you can see how we can help.