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29

Common Law Agreements – Alberta (Part 2): Primary Home and Matrimonial Home issues…

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Common Law Contracts (Alberta)

Please note that the information provided herein is not legal advice and is provided for informational and educational purposes only. If you need legal advice with respect to a cohabitation agreement in Alberta, you should seek professional assistance.

This is the second of a series of blog posts about cohabitation agreements in Alberta, Canada. In my first blog, I talked about what cohabitation agreements are and why they are used. I also started talking about what happens if you don’t have one. I’ll continue that discussion in this blog by looking at rights and obligations that arise in the context of the Primary Home, the Matrimonial Home (if the cohabiting couples end up marrying each other), and ownership and division of matrimonial property.

Possession of the Primary Home

But what about rights to possess or remain in the home? Well, the Family Law Act gives an adult interdependent partner the opportunity to obtain certain rights of possession concerning the PRIMARY HOME as part of a SUPPORT ORDER (discussed above). Pursuant to Section 68(1) of the Family Law Act, in making a SUPPORT ORDER in respect of “adult interdependent partners”, the Court may ALSO ORDER that an adult interdependent partner:

  • be given exclusive possession of the primary home;
  • be evicted from the primary home; or
  • be restrained from entering or attending at or near the primary home.

In addition to making such an order, the Court may give an adult interdependent partner POSSESSION of as much of the property surrounding the primary home “as is necessary, in the opinion of the court, for the use and enjoyment of the primary home”: section 68(2). Finally, an order under section 68 may be made subject to any conditions and for any time that the Court considers necessary: section 68(3).

So what constitutes the “Primary Home”? Well, section 67(b) defines the “Primary Home” as property that is owned or leased by one or both adult interdependent partners. It is or has been occupied by those partners are their home. And it is a house (a part of a house) that is a self-contained dwelling unit, a part of a business used as living accommodation, a mobile home, a residential unit (as defined in the Condominium Property Act) or a suite.

If, through a Cohabitation Agreement, support obligations are waived by the adult interdependent partners, then it seems that an order concerning rights to possess the Primary Home will not be available under the Family Law Act (given that such an order apparently can only be made as part of a Support Order. This view seems to be supported by the case of Ocheski v. Hynes, [2007] A.J. No. 341. In that case, a valid Cohabitation Agreement precluded support obligations and required the parties to waive any interests in the others’ property. On the issue of whether an order for support is a pre-requisite to an order for exclusive possession of the home, the Court chose not to answer: “Given my findings on the Agreement…I do not need to determine this issue”. Nonetheless, it appeared that the Court relied on the Cohabitation Agreement. Although that Agreement did not specifically require the parties to waive rights under the Family Law Act to possess the Primary Home, it clearly required the parties to “never have to support each other on the basis of spousal support, nor would they be able to make any claim on property from the other”. On this basis, it could be argued that a clear waiver of support in a Cohabitation Agreement, coupled with a release of claims to possess the Primary Home under the Family Law Act, could preclude such claims from arising.

Ownership and Division of the Matrimonial Property

Now, if the parties to a Cohabitation Agreement get married, then ownership and division of their property may become subject to the Matrimonial Property Act. In Daved v. Daved, [2010] A.J. No. 768, the Alberta Court of Queen’s Bench explained how matrimonial property is typically divided (absent a Prenuptial Agreement) in Alberta under the Matrimonial Property Act (“MPA”):

145 It is helpful to review the first principles of division of matrimonial property under the MPA. The Court of Appeal recently has done so in Jensen v. Jensen, 2009 ABCA 272, 464 A.R. 16. The court acknowledged (at para. 1) that the legislation legally recognizes marriage as an economic partnership, founded on the rebuttable presumption that the parties mean to equally share the fruits of their labour during and as a result of the marriage.

146 The court noted that the MPA has not been materially amended since 1978. Accordingly, early case law setting out first principles still governs. The court indicated (at paras. 17-23) that:

Section 7 of the MPA sets out a scheme for the distribution of property between spouses. Certain property, including property acquired by a spouse before marriage, is classified as exempt from distribution under that section: s. 7(2). Any increase in the value of exempt property during the course of the marriage may be distributed in a manner that the court considers just and equitable: s. 7(3). Section 8 sets out the factors to be taken into consideration in making such a distribution.

Section 7(4) deals with the distribution of non-exempt matrimonial property. It sets forth a legal presumption of equal distribution. Only where, after considering the factors in s. 8, the court concludes it would be unjust or inequitable to divide the property equally may an unequal distribution of non-exempt property be made. There is no formula for applying the s. 8 factors. The presumption of equality for non-exempt property acquired during marriage is the closest the Legislature came to imposing a rule for matrimonial property distribution (See Dwelle v. Dwelle (1982), 46 A.R. 1, 31 R.F.L. (2d) 113 (C.A.)).

147 The court in Jensen summarized the applicable principles at para. 23:

The MPA is premised on a presumption of equal distribution of non-exempt property acquired during the marriage. The presumption should only be rebutted in the clearest of cases when, having regard to the s. 8 factors, it would be unjust and inequitable to make an equal division. When considering the s. 8 factors, courts should not embark upon the weighing of each party’s respective contribution and make divisions of property that are proportionate to the relative contributions of each spouse. Rarely if ever will the contribution of each spouse be the same. The purpose of the legislation is to avoid microscopic analysis of the respective roles each party played to determine who did more. It is only in cases where, having regard to the factors in s. 8, it would be unjust and inequitable to have an equal division that the court should depart from the principle of equality. …

149 As confirmed in Jensen, any increase in the value of exempt property during the course of the marriage may be distributed in a manner that the court considers just and equitable: s. 7(3). Section 8 sets out the factors to be taken into consideration in making such a distribution.

To summarize, there is a four-step process for dividing matrimonial property according to sections 7 and 8 of the Matrimonial Property Act: (1) determine all property owned at the date of trial; (2) discern the property that is exempt from distribution under section 7(2) (the exempt property under section 7(2) is valued at the date of acquisition or the date of marriage); (3) determine what property falls under section 7(3), which is then distributed between the parties in a manner that is just and equitable taking into consideration the factors set out in section 8; and (4) divide the balance of the remaining property valued at the date of trial equally, unless it would be unjust and inequitable to do so considering the factors set out in section 8: see Hodgson v. Hodgson, 2005 ABCA 13, [2005] A.J. No. 22 and Nasin v. Nasin, [2008] A.J. No. 390.

Now, importantly, a Cohabitation Agreement that survives marriage can be used to ALTER or AVOID the application of the ownership and division of property regime provided in the Matrimonial Property Act. Specifically, section 8 of that Act says that, in making a distribution under Section 7 of that Act, the Court must take into account the terms of an oral or written agreement between the spouses. Furthermore, section 37(1) of that Act says that Part 1 of the Act (which includes section 7) DOES NOT apply to property owned by either or both of the spouses or acquired by them if they have entered into a written agreement (i.e. a Prenuptial Agreement) that is enforceable and which provides for the status, ownership, and division of that property.

Possession of the Matrimonial Home

Possession of the Matrimonial Home If the couple gets married and the Cohabitation Agreement continues to be valid and enforceable, the home that they are living in may become their “Matrimonial Home” under the Matrimonial Property Act. Section 1(c) of the Matrimonial Property Act defines the “Matrimonial Home” as property that is owned or leased by one or both spouses. It is or has been occupied by those spouses as their family home. And it is a house (a part of a house) that is a self-contained dwelling unit, a part of a business used as living accommodation, a mobile home, a residential unit (as defined in the Condominium Property Act), or a suite. While ownership and division of the matrimonial home can be dealt with in a Cohabitation Agreement, rights to possess the Matrimonial Home may not be able to be waived through that Agreement. Specifically, section 19(1) of the Matrimonial Property Act allows a spouse to bring an application to Court for an order that: a spouse be given exclusive possession of the matrimonial home; a spouse be evicted from the matrimonial home; or a spouse be restrained from entering or attending at or near the matrimonial home. A strong argument could be made that parties cannot contract out of rights to possess the matrimonial home prior to or during their marriage. Unlike with a “Primary Home” under the Family Law Act, a spouse’s right to possess a matrimonial home under the Matrimonial Property Act does not appear to be contingent on a Support order. Furthermore, while section 37(1) of the Matrimonial Property Act contemplates that parties can enter into agreements to allow spouses to determine ownership and division of property (including the “Matrimonial Home”), that section does not mention anything about rights of possession. Interestingly, in Ontario, section 52(2) of the Family Law Act clearly states that parties CANNOT use a marriage contract to limit a spouse’s right (under that Act) to possess the Matrimonial Home.

In the next blog, I’ll discuss how being in an “adult interdependent relationship” (a type of common law relationship) can affect your Wills and estates.

By the way, if you’re looking for a Cohabitation Agreement in Alberta that either terminates upon marriage or survives marriage (and becomes a prenuptial agreement or marriage contract), then you’ve come to the right place:

Cohabitation Agreement – Terminates Upon Marriage

This legal form can be used by non-married couples in Alberta who wish to avoid creating obligations through their cohabiting (i.e. living together) with each other. This particular cohabitation agreement waives support obligations and divides property according to legal ownership (in other words, what’s mine is mine; what’s yours is yours). This cohabitation agreement terminates when the parties get married to each other. If you want the cohabitation agreement to continue past marriage (i.e. continue to be valid and enforceable past marriage), then you can check out the cohabitation agreement below:

Cohabitation Agreement – Continues Past Marriage

This legal form can be used by non-married couples in Alberta who wish to avoid creating obligations through their cohabiting (i.e. living together) and their marriage to each other. It essentially becomes a Prenuptial Agreement or Marriage Contract when the parties marry each other. This particular cohabitation agreement waives support obligations and divides property according to legal ownership (in other words, what’s mine is mine; what’s yours is yours). This cohabitation agreement continues to be valid and enforceable past marriage.

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