Who Gets What? Property and Asset Division in a Cohabitation Split
Understanding Property Rights in a Cohabitation Split
In Alberta, property division laws vary significantly between married and common-law couples. Married spouses are covered under the Matrimonial Property Act (MPA), which ensures a structured division of assets. However, common-law partners, legally referred to as Adult Interdependent Partners, do not have the same automatic rights.
When an unmarried couple separates, asset division is primarily determined by legal ownership—meaning that whoever holds the title to a property or asset is recognised as its legal owner. This can create challenges when one partner has contributed financially or through unpaid labor but does not have legal ownership.
In such cases, legal doctrines like unjust enrichment and constructive trust may allow the non-owner to claim compensation or an interest in the property to prevent unfair financial gain.
Dividing Jointly Owned Assets
For jointly owned assets, the division is generally more straightforward. When both partners are listed on a property title, vehicle registration, or other jointly owned assets, they are typically entitled to a share.
However, the actual division may depend on financial contributions, maintenance efforts, or other non-monetary inputs made by each partner during the relationship. In cases involving joint bank accounts, funds are often split 50/50, but disputes can arise if one partner withdraws a significant amount before the separation is finalised.
In such situations, courts may intervene and adjust the division based on each partner’s financial contributions and fairness.
Unjust Enrichment and Constructive Trust Claims
If an asset is in one partner’s name but the other contributed significantly—financially or through unpaid labor—they may have a claim under unjust enrichment. This applies when:
- One partner benefits financially while the other suffers a loss.
- There was no formal agreement for compensation.
- Keeping the asset solely in one partner’s name is deemed unfair.
A constructive trust claim may also be used when a partner’s contributions increase an asset’s value, giving them a right to a share.
Handling Debt in a Cohabitation Split
Debt responsibility in a cohabitation split is typically assigned to the individual whose name appears on the loan or credit agreement. However, when both partners have shared financial obligations, such as joint loans, credit cards, or household expenses, the division of debt can become a legal issue.
Courts may assess each partner’s financial contributions, usage of borrowed funds, and the intended purpose of the debt to determine a fair allocation. If one partner incurred debt for mutual benefits, such as funding home improvements or covering shared expenses, they may seek reimbursement from the other partner, though disputes can arise in the absence of a formal agreement outlining debt responsibilities.
Cohabitation Agreements: Preventing Future Disputes
A cohabitation agreement can prevent disputes by outlining asset and debt division terms before issues arise. A legally binding agreement can:
- Define property ownership and division.
- Establish financial responsibilities.
- Outline how debts will be handled.
- Reduce the risk of legal conflicts.
Having a clear financial agreement in place can provide security for both partners and avoid costly legal battles.
Seeking Legal Assistance
Property and asset division in a cohabitation split can be complex, especially when high-value assets or financial contributions are involved. Since common-law partners do not have automatic property rights, seeking legal guidance from the Best Family Lawyers in Edmonton is crucial.
Courts consider various factors, including financial contributions, shared responsibilities, and agreements between partners, when determining asset division. Without clear documentation or legal protection, disputes can arise over ownership, compensation, or entitlement to shared property.
Understanding Alberta’s cohabitation laws and potential legal claims can help individuals protect their financial interests, prevent unexpected legal battles. These laws also help navigate the separation process fairly and effectively, ensuring a more equitable outcome.