February 10, 2021
Unequal Division of Family Property Part 1: Short Relationships and Unequal Financial Contribution
If one spouse owns the family home, contributes more money and the relationship is short, will family property be divided equally?
A common situation is this: a couple moves in together and only one of them owns and financially maintains the family home. They are together for a few years (as least two) and then they separate.
As I have discussed in my previous blog post found here, family property is generally shared by spouses equally if they separate. Family property is all property earned or acquired by one of the spouses during the “spousal relationship.” I discuss the features of spousal relationships here.
When B.C.’s Family Law Act was enacted in 2011, it was supposed to bring some certainty into how family property is divided. That is, family property is presumed to be equally divided 50/50, regardless of the contribution of each spouse. Further, under the Family Law Act, family property can only be unequally divided if it is “significantly unfair” to divide it equally – and the courts have said this is a high bar.
To meet the “significant unfairness” test, the court must be satisfied that there exists “something objectively unjust, unreasonable or unfair in some important or substantial sense” which requires the family property to be divided unequally.
After the enactment of the Family Law Act, family law lawyers thought that courts would unequally divide family property only in rare circumstances, but we have seen more unequal division cases than expected – in fact, unequal division cases are on the rise in British Columbia.
Is a short relationship where only one of the spouses owned and financially maintained the family home one of these “significantly unfair situations” that warrants unequal division?
It seems so.
A court may unequally divide family property if it would be significantly unfair to divide it equally based on the short duration of the relationship and “any other factor” that may lead to significant unfairness. The contribution of each spouse has been considered by the courts within the “any other factor” consideration for an unequal division.
Below I will discuss short relationships and unequal contribution as a basis for unequal division.
Short relationship
We have seen unequal division by the courts in cases where the spouses have relatively short relationships. Specifically, a relationship of approximately 4 years or less has been a factor that has been given considerable weight in supporting unequal division cases. In Vancouver, we saw quite a few unequal division cases in short relationships due to the dramatic rise in the Vancouver real estate market. This led to a significant increase in the value of the matrimonial homes in a short period of time, with little or no contribution of the non-owning spouses. The courts saw the 50/50 split of the increase in the value of the family home as a windfall to the non-owning spouse, and thus significantly unfair.
Lack of contribution
In several BC cases, the court has also reapportioned the increase in the value of a property to the spouse that owned the property before the relationship began and was responsible for virtually all of the payments towards the down payment, mortgage, taxes, and the ongoing household expenses of the property before and during the relationship. Unequal division based on lack of contribution is most often tied to the short length of a relationship, as relative contribution becomes less significant in longer relationships where the spouses’ lives are more intertwined.
Recent BC court case on unequal division
Recently another B.C. court unequally divided the family home based on the short length of the relationship and the non-owning spouse’s lack of contribution.
In the recent Vancouver BC Supreme court case of Chapman v. Cuthbert 2021 BCSC 1, the parties were in a common-law relationship for approximately 2.5 years, which ended with separation in November 2017. The main issue in dispute was the division of the matrimonial home. Mr. Cuthbert owned the family home before the relationship, and the couple lived in the home during their relationship. The increase in equity in the family home during the spousal relationship was $196,505.02, and this was attributable to market forces rather than any specific contribution by either of the parties towards the family home.
Mr. Cuthbert asked for an unequal division of the family home on the basis that equal division would be significantly unfair due to the short length of the relationship; because he owned the matrimonial home before the relationship; and was the sole person on the mortgage to the home, made all the mortgage payments, took care of all of the property-related expenses, and a substantial portion of the parties’ joint living expenses.
Ms. Chapman sought an equal division of the family home under the Family Law Act.
The court found that the family home should be divided unequally. The court awarded Mr. Cuthbert 80% of the increase in the value of the family home and Ms. Chapman 20% of the increase in the value of the family home.
The court stated that the greatest factor which resulted in the unequal division was the short duration of the relationship between the parties (2.5 years). The court also found that the unequal contribution of the parties meant it was unfair to divide the family property portion of the family home equally. Namely, the asset was purchased with Mr. Cuthbert’s money, he paid for all the house-related expenses, and he was the only person who put his money and credit at risk by being solely on the title for the mortgage.
What’s the takeaway?
If the family home has increased in value during the relationship but one spouse owned the family home before the relationship, has contributed to most of the expenses and the relationship was relatively short, there is a reasonable likelihood that the equal division of family property division provisions will not be followed, and family property will be unequally divided. The likelihood of this occurring can only be assessed on a case-by-case basis and thus it is very important to consult a Vancouver family property law lawyer to discuss the likelihood of an unequal division occurring in your case.You can contact me here to book a free consultation to discuss your unique situation.
NOT LEGAL ADVICE. Information made available on this website is for information purposes only and is not legal advice. Do not rely on this information, nor take or fail to take any action, based upon this information. Do not disregard professional legal advice or delay in seeking legal advice because of something you have read on this website.
January 29, 2021
COVID-19 & Family Law: does the pandemic affect the ability of families to achieve resolution?
In this age of COVID-19, a change to the way that family law disputes are resolved is needed, more than ever.
It has now been almost one year since the pandemic turned our lives and the world as we know it upside down. For the first several months of lockdown, courts in Vancouver and other parts of B.C. were closed to all matters except for emergencies. Subsequently, the courts slowly began to open by holding hearings over the telephone. Courts are currently open but are still hearing almost all matters, except for trials, virtually or over the phone.
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January 27, 2021
Child Support & Section 7 Special or Extraordinary Expenses: What are they? What aren’t they?
When parents separate, in addition to basic expenses covered by child support (such as food, and shelter), parents must determine which additional expenses they will share. These additional expenses are referred to as “special or extraordinary expenses” or “section 7” expenses, families in Vancouver who are separating rarely agree on what these are.
The Federal Child Support Guidelines sets out a list of what can be considered a special or extraordinary expense. They are:
January 26, 2021
Can you lose your excluded property if you separate from or divorce your spouse?
As I mentioned in my last post, there are eight categories of excluded property in the Family Law Act. Some common types of excluded property are:
- Property owned by a spouse prior to the spousal relationship. For example, your equity in the family home that you owned prior to becoming spouses.
- Gifts to one spouse from a third party. For example, a gift from your parent to you for the down payment of real estate.
- Inheritances received by one spouse. For example, your grandmother passes and leaves you a cash inheritance.
- Personal injury settlements and insurance settlements (not attributed to the loss of income).
A common question for Vancouver family law lawyers is: If you have excluded property, and if you and your spouse separate or divorce, you get to keep your exclusion, right?
January 7, 2021
Family Law Property Rights: an often Misunderstood and Contentious Subject
In Vancouver, family property division, family debt division and excluded property division are governed by the laws in the Family Law Act. These laws apply to those couples who meet the definition of “spouses” in the Family Law Act. Spouses are those couples who have been “living in a marriage-like relationship” for a period of two years or more.
January 1, 2021
Not living with your partner? You could still be spouses with rights and obligations under family law
If you are spouses, then family property divisions, family debt division and spousal support laws apply to you.
As discussed in my previous post which can be found here, unmarried couples must live in a “marriage-like” relationship for a period of at least two continuous years to be considered “spouses” under the Family Law Act which applies to all family law matters in Vancouver and other parts of BC.
December 29, 2020
Family Property Law: When will it apply to you?
At what stage of a relationship should you start thinking about family property and family debt division laws and whether they apply to you?
I will answer this question with another question:
Are you entering a new relationship, in a current relationship, or ending a relationship?