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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The post Common-Law Relationships and Property Division in B.C. appeared first on Northam Law Corporation.

1. Equal Division: The General Rule

The starting point is that all family property and family debt are divided equally (50/50) between spouses, regardless of whose name is on the asset or debt, or who contributed more financially. This presumption applies unless the parties have a valid agreement stating otherwise, or unless equal division would be “significantly unfair”.

2. Categories of Property

A. Family Property

Family property includes all real and personal property owned by one or both spouses at the date of separation, except for excluded property. It also includes the increase in value of excluded property during the relationship. Examples include:

• The family home (regardless of whose name is on title)
• Bank accounts, investments, RRSPs, pensions
• Businesses or business interests
• Vehicles, art, and other significant items
• Debts incurred during the relationship (e.g., mortgages, credit cards)

B. Excluded Property

Excluded property is not subject to equal division, but any increase in its value during the relationship is family property and is divided equally. Excluded property includes:

• Property acquired by a spouse before the relationship began
• Gifts or inheritances received by one spouse from a third party
• Certain personal injury settlements or insurance proceeds (unless for both spouses or lost income)
• Some types of trust property

The spouse claiming an exclusion bears the burden of proof. If excluded property is transferred into joint names, recent amendments clarify that the exclusion is generally preserved, but tracing and intention remain important.

3. Family Debt

Family debt includes all financial obligations incurred by either spouse from the start of the relationship to the date of separation, and debts incurred after separation if used to maintain family property. Both spouses are equally responsible for family debt, regardless of whose name is on the account.

4. Unequal Division

A court may order an unequal division of family property or debt if equal division would be “significantly unfair,” considering factors such as:

• The duration of the relationship
• The terms of any agreement between the spouses
• A spouse’s contribution to the other’s career
• Whether family debt was incurred in the normal course of the relationship
• The ability of each spouse to pay a share of the debt
• Post-separation changes in value due to one spouse’s actions
• Tax consequences of division

5. Agreements

Spouses may contract out of the default rules by entering into a written agreement (e.g., marriage agreement, cohabitation agreement, or separation agreement). Such agreements are generally binding unless set aside by the court for reasons such as lack of disclosure, duress, or significant unfairness.

6. Process for Division

• By Agreement: If spouses agree, they can set out the division in a separation agreement.
• By Court Order: If no agreement is reached, either spouse may apply to the Supreme Court for an order dividing property and debt.
• Time Limits: Claims must be brought within two years of divorce (for married spouses) or separation (for unmarried spouses).

7. Special Considerations

• Companion Animals: As of January 2024, the court may make orders regarding ownership of pets, considering factors such as care and relationship to children.
• Property Outside BC: The court may make orders regarding property outside the province in certain circumstances.
• Tax Implications: Division of certain assets (e.g., RRSPs, real property) may have tax consequences, which should be considered in settlement or court orders.

Ready to start the divorce process? Take the first step and schedule your appointment with Northam Law today. Contact us via phone at (604) 630-2350 or email us at admin@northam-law.com.

Related Articles:

Legal Steps To Take To Protect Assets and Financial Interests In The Event of a Separation or Divorce

Examining How Marriage Breakdowns Influence Property Transfer Tax Exemptions

The post Property Division on Divorce or Separation in British Columbia appeared first on Northam Law Corporation.