Dividing Property After a Common-Law Relationship Ends in British Columbia
When a common-law relationship in British Columbia comes to an end, the division of property is primarily governed by the Family Law Act. Under this legislation, unmarried couples who have lived together in a marriage-like relationship for at least two years are legally considered “spouses” for the purpose of property division, with a process that closely mirrors that for married couples.
The initial step in this process is to confirm your spousal status. To qualify for property division under the Family Law Act, you must genuinely have lived together in a marriage-like relationship for at least two years. If you don’t meet this specific threshold, the property division provisions of the Act generally won’t apply, meaning each party will typically retain the property registered in their own name. It’s worth noting that even if you have a child together but haven’t cohabited for two years, you might be considered a spouse for support purposes, but not for property division.
Once spousal status is established, the next crucial step is to identify and classify all property. Property is categorized into two main types: Family Property and Excluded Property. Family property includes all assets acquired by either spouse during the relationship, regardless of whose name is on the title. This typically covers real estate purchased during the relationship, bank accounts, RRSPs, pensions, investments, vehicles, and business interests. Importantly, any increase in the value of excluded property during the relationship is also considered family property. Excluded property, on the other hand, generally includes assets owned by one spouse before the relationship began, gifts or inheritances received by one spouse during the relationship, and certain types of damage awards, insurance proceeds, and trust property.
Before resorting to court, spouses are strongly encouraged to attempt to reach an agreement on property division. This can be achieved through direct negotiation, culminating in a formal separation agreement, for which independent legal advice is highly recommended. Alternatively, methods like mediation or collaborative law can help resolve disputes outside of court. If an agreement cannot be reached, either party may apply to the BC Supreme Court for a property division order. It’s crucial to be aware of the limitation period, which is two years from the date of separation for common-law spouses.
Throughout this process, full financial disclosure is a legal requirement for both parties. You are obligated to provide complete and honest information regarding all assets, debts, income, and expenses. Failing to provide full disclosure can lead to severe court penalties or even result in an agreement or order being set aside.
Once an agreement or court order is in place, the next step involves the transfer or division of assets. For assets like real estate or vehicles, legal title must be updated through the appropriate authorities, such as the Land Title and Survey Authority for real property. Legal assistance is highly recommended to ensure all documentation is properly prepared and registered. Additionally, family debts incurred during the relationship are generally considered shared and are divided equally, regardless of whose name the debt is in. However, creditors may still pursue either party for joint debts. To protect yourself, it’s wise to close joint accounts and credit lines, notify creditors of the separation, and consider refinancing or paying off shared debts.
Finally, it’s important to consider the tax implications of property transfers. The transfer of certain assets, particularly investment properties, may trigger capital gains tax. Consulting both a family lawyer and an accountant is prudent to fully address any potential tax liabilities. It’s also worth noting that, as of January 2024, companion animals (pets) are treated as a unique type of property with specific rules applying to their division. While equal division of property and debt is the standard, a court will only order an unequal division if equal division would be “significantly unfair” (Family Law Act, s. 95).
If you are navigating the complexities of property division after a common-law relationship in British Columbia, contact Northam Law today to schedule an appointment. You can reach us by phone at 604-630-2350 or by email at admin@northam-law.com.
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