Calgary Family Property Act Cohabitation Agreements are now a hot topic in Alberta. An odd thing happened during COVID-19. While the news was occupied with the COVID-19 social and economic shutdown, common-law couples in Alberta gained the same property rights upon relationship breakdown as married couples. This was a significant development in family law in Alberta. It went substantially unreported. Our Calgary family lawyers have experience with the new legislation and options for those who wish to opt-out of the equal sharing property regime. In today’s blog, senior Calgary family lawyer Peter Graburn explains Calgary Family Property Act Cohabitation Agreements.
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Before January 1, 2020, “common-law” couples (called Adult Interdependent Partners, or AIPs) in Alberta did not have any automatic right to a division of family property on relationship breakdown. Married couples were entitled to an equitable (ie. generally equal) division of matrimonial property upon separation under the Matrimonial Property Act. AIPs, on the other hand, had to bring a claim under the common law principles of constructive trust, unjust enrichment, quantum meruit and joint family venture for the division of family property (see Kerr vs. Baranow 2011 SCC 10), usually resulting in a less than 50/50 division of property.
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That has now all changed. On January 1, 2020, the Alberta Family Property Act (announced by the Alberta Government in November 2018) came into effect. Now, almost 6 months later, some things have become clear regarding the new legislation, including:
● the Family Property Act (FPA) grants equal division of property rights to both married and common-law ex-partners in Alberta;
● the FPA applies to both married couples and AIPs who separate on or after January 1, 2020; the MPA still applies to married couples who separated before January 1, 2020 (unless they agree otherwise), and;
● the FPA extends the property rights of married couples who lived “common-law” before marriage to the beginning of that relationship (rather than just to the date of marriage).
To date, there has (understandably) been little case-law on the interpretation of the new legislation.
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But what if you don’t want to be affected by this change in property rights’ legislation? What if you are married but lived “common-law” before marriage and do not want pre-marriage property to be divided on marriage breakdown? More specifically, what if you are an AIP (living “common-law”) and do not want property division rights to apply to your relationship at all (ie. that was one of the reasons why you decided not to get married)? What can you do?
Fortunately in this situation, Section 37(1) of the new Family Property Act (RSA 2000, c F-4.7) provides:
Agreements between spouses or adult interdependent partners:
37(1) Part 1 does not apply to property that is owned by either or both spouses or adult interdependent partners or that may be acquired by either or both spouses or adult interdependent partners, if, in respect of that property, the spouses or adult interdependent partners have entered into a subsisting written agreement with each other that is enforceable under Section 38 and that provides for the status, ownership, and division of that property.
Accordingly, the new Alberta Family Property Act (as did the old Matrimonial Property Act) has an ‘opt-out’ provision, meaning that couples (married or “common-law”) can agree that the legislation does not apply to them and that division of family property upon the breakdown of the relationship will be divided as set out in that agreement. These agreements can be called (alternatively) Cohabitation, Prenuptial, Postnuptial or Adult Interdependent Partner Agreements, depending on the family relationship at the time of entering into the Agreement (for a further discussion on these different types of agreement and whether they are enforceable, see article: Calgary Cohabitation and Prenup Agreements Lawyers . However, some things must be kept in mind regarding these agreements, particularly:
● they must meet certain formal requirements to be enforceable, ie. in writing, signed by both parties, and made freely and voluntarily without any compulsions by the other party, etc.;
● the parties must have obtained independent legal advice (ILA) from a lawyer, confirming the parties were aware of: the nature and effect of the agreement; possible future claims to property under the FLA, and; that they give up those claims to make the agreement effective, etc.;
● existing agreements for the division of property that were enforceable before the new legislation will still be enforceable, but Cohabitation Agreements do not apply after marriage (unless the agreement specifically states otherwise).
The new Family Property Act marks a substantial change to the division of property law in Alberta – “common-law” partners now have the same rights on relationship breakdown as married partners (as in all the other Western Provinces). To be sure, this is a significant change in Alberta government policy, reflecting the increased number of family partners living outside marriage (ie. “common-law”) rather than married.
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How to divide family property on relationship breakdown (as whether to live together inside or outside marriage) is a personal choice, based on many factors. The new Family Property Act sets the de facto status of the division of family property upon separation of both married and unmarried partners in Alberta. But this status may be changed by the partners entering into a binding agreement to confirm that status. These agreements (as do all agreements) add certainty and predictability to this situation, whether to accept (all or part) of the legislation or to vary from it.
Calgary Family Property Act Cohabitation Agreements Lawyers assist their clients to understand the significant changes the new Family Property Act has had on the division of family property in Alberta, and encourage their clients to be proactive to address these changes by entering into legally drafted Cohabitation Agreements.
Contact our Calgary Family Property Act Cohabitation Agreements lawyers to understand your options if you are entering into a new committed relationship.
