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Jul

14

Community of Property: What’s it all about?…

Toronto business lawyerCommunity of Property: What’s it all about?

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 cohabitation, prenuptial or marriage contracts and agreements, you should seek professional assistance (e.g. make a post on Dynamic Legal Forms). We have Toronto, Ottawa, Hamilton, Brampton, Mississauga and other Ontario lawyers registered to help you. You can contact me directly if you need a lawyer.

So what is “Community of Property” all about? Well, traditionally, the idea used to be that, instead of separating property between married spouses upon a breakdown of their relationship, courts could find that the spouses’ assets had been combined into a unified “community of property“. Each spouse would own one-half of the community of property on the assumption that they each contributed equally to the economic assets of the marriage. So if each spouse’s separate assets had been intermingled with property acquired during the period of marriage to the extent that it couldn’t be identified, then a presumption could arise that it became part of the “community of property“.

Now, the question to ask is whether present Ontario courts have the power to view marital assets as a “community of property“. The answer is, to a large extent: NO. The Ontario Family Act governs ownership and division of property when married spouses part ways. It does so through an EQUILIZATION OF NET FAMILY PROPERTY REGIME. The Act does not create a traditional community of property regime or grant any powers in respect thereof to the courts. As the Superior Court of Justice held in Braga v. Braga [2006] O.J. No. 2600:

6 The Family Law Act does not create a community of property regime. Chattels are not held in common. Other than s. 9 and s. 10 of the Act the court has no power to allocate property between the parties. The court values the property owned by each. If a dispute as to the ownership and right to possession of specific property arises the court may determine that issue under s. 10 applying the rules for determining ownership which every lawyer learns in first-year property classes. Once the property of each party is valued, then, subject to statutory exclusions and deductions a money judgment is issued in an amount sufficient to equalize the value of each party’s “net family property”. Only after the court has determined the quantum of the payment necessary for equalization does the court have the right to transfer property under S. 9 of the Act in satisfaction of the money judgment.

So what do sections 9 and 10 of the Act say? Well the gist of section 9 gives the court the power to order a spouse to pay the other spouse an amount owed under the Act. OK. So there’s nothing about community of property there. Furthermore, section 10 allows the court to answer questions between spouses concerning the ownership or right to possess particular property (other than as arising out of an equalization of net family property). So basically, the court doesn’t give any regard to the old “Community of Property” thinking. Rather, the court is told by the legislature to follow a structured EQUILIZATION OF NET FAMILY PROPERTY REGIME under the Act.

I’ll discuss an Equilization of Net Family Property regime next…

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