Contributed to Your Partner’s Home? You Might Have a Financial Interest In It
Written on behalf of Shariff & Associates
In some cases, when a relationship ends, one party may seek a property interest in the home where the couple resided. This party may not be on title to the home and might seek to have their interest in the property recognized, such as to benefit from increased real estate values. This may be achieved through the imposition of a constructive or resulting trust in situations where the title-holding party would be unjustly enriched by retaining the total value of the asset. As a result, the party not on the property title may receive compensation for their contributions to the home during the relationship.
The remedy of a constructive or resulting trust based on an unjust enrichment can be used to apportion interests in property to remedy the disproportionate retention of an asset by one party. While a proprietary award will not be appropriate in every case, an entitled party may benefit from a monetary award reflecting the value of a party’s contribution to the property. Romantic partners who contribute financially to a home but are not included on title should ensure their intentions are clear to avoid unintended outcomes.
A Claimant Must Establish an Unjust Enrichment
Parties in a relationship can assert an interest in a house through a claim of unjust enrichment. In family law cases, such a claim can arise in common-law relationships where assets are generated through the joint family venture or where one spouse leaves the relationship holding a greater share of the assets. In Kerr v. Baranow, Justice Cromwell of the Supreme Court of Canada indicated that an unjust enrichment might occur when the “contributions of both parties over time have resulted in an accumulation of wealth” and one party “retains a disproportionate share of the assets which are the product of their joint efforts”. In Kerr, the court noted that there may not be a link between the contributions of one party to a specific piece of property, but there can be a link between the joint efforts of the parties and the accumulation of wealth.
The application of these principles to a claim for a constructive trust or joint family venture by a married spouse with the equalization provision of the Family Law Act was considered by the Ontario Court of Appeal in Martin v. Sansome. The Court noted that the concept of equalization recognizes that childcare, household management, and financial support are joint responsibilities of spouses. In many marital relationships, there will be an equal contribution by the spouses regarding specific responsibilities. Consequently, Courts have found that in most cases, any unjust enrichment arising from the marriage will be addressed through the equalization provisions of the Family Law Act.
How to Identify a Joint Family Venture
For unmarried partners, cohabitation by itself does not entitle one party to a share of the other party’s property. However, when wealth is accumulated within a relationship through joint efforts, the principles of unjust enrichment can arise as a remedy. A range of factors can be relevant to identifying a joint family venture.
In Kerr, the Supreme Court of Canada suggested several factors relevant to identifying a joint family venture, including:
- mutual effort;
- economic integration;
- actual intent; and
- priority of the family.
The courts have noted that there is little doubt that married couples working towards common goals would meet these criteria and constitute a joint family venture. In Hutsul v. Kostikov, the Ontario Superior Court of Justice discussed how the pooling of effort and teamwork, the decision to raise children together, and the length of the relationship could indicate the extent to which the parties formed a partnership and worked towards mutual goals. Further, the more integrated a couple’s finances and economic well-being are, the more likely it will be that the parties are in a joint family venture.
Trusts Can Arise if a Party Contributes to the Acquisition of Property
A resulting trust can arise where one party contributes to purchasing property, and both parties intend for the property to be shared. Under common law, a trust may be imposed on the titleholding party in favour of the non-titleholding party. The trust recognizes the interest in property of those individuals who contributed to the acquisition of the property, regardless of whether that person is on the title.
As the Court in Cerenzia v. Cerenzia noted, this claim “must be based on a specific contribution of funds to the acquisition of the asset”. Where somebody advances funds, there is a presumption that the property acquired by the funds returns to the individual advancing the funds.
In Cerenzia, the husband alleged that he had always thought he had an interest in the parties’ house and believed it was held in both parties’ names. His argument was based on the idea there was a common intention that the home would be in both parties’ names and that his wife reneged on this when the marriage broke down. However, an implied common intention was insufficient to establish a resulting trust. Instead, the Ontario Superior Court held that a specific contribution of funds was required to establish a trust.
Ownership Interest Based on Home Purchase Out of Joint Account
In Nobrega v. MacLennan, the parties set up a joint bank account before marriage. The money in that account was used to pay for their expenses as the couple integrated their financial affairs. Eventually, the funds to purchase the matrimonial home came from this account.
The wife sought an ownership interest in the matrimonial home through the application of a resulting trust. Since the home purchase was made using funds from the joint account, to which both parties contributed, both parties could be found to have an ownership interest in the property.
Lack of Evidence Proving Joint Family Venture
The case of Westlake v. Ellicock involved a claim for a property interest in a house owned by one party. The parties were in a relationship for one year, during which time they were not married, did not have children, and were not common-law spouses. Mr. Ellicock owned a home that he persuaded Ms. Westlake to purchase as he was going to lose the property through foreclosure. She bought the home for more than its appraised value in her name alone.
When the relationship ended, Mr. Ellicock claimed he had an interest in the property. His claim was based on allegations that the parties formed an economic partnership and that he made financial contributions to the house’s maintenance and repairs. Ms. Westlake denied these claims and sought an order dismissing Mr. Ellicock’s claim to the property.
No Evidence That Husband Contributed to Home’s Value or Maintenance
In these circumstances, a resulting trust could not ground a claim to any property interest. Ms. Westlake paid an amount greater than the appraised value of the home, and all the funds came from an inheritance she received. Mr. Ellicock made no financial contribution to the purchase of the home, and there was no evidence that Ms. Westlake was holding part of the title in trust on his behalf.
In assessing the claim for an interest in the property based on unjust enrichment, the Ontario Superior Court looked to Kerr v. Baranow. Mr. Ellicock could not establish that he gave a benefit to Ms. Westlake that she retained, and there was no evidence that she was enriched by his work or contributions to the property. Further, there was no suggestion that the value of the house increased due to any maintenance or other contributions that Mr. Ellicock alleged that he made.
Court Declines to Find an Unjust Enrichment in a Short Relationship
The Court in Westlake did not accept that any contributions towards the home were made under a joint family venture for the parties’ joint accumulation of wealth over their relationship. They lived together for only four months, and there was no suggestion that they worked together to increase the home’s value.
Further, their finances were not economically integrated. They provided limited financial support to each other, and after Ms. Westlake purchased the property, there was no indication she intended the home to be a shared asset. Overall, there was no evidence to support that the two parties were engaged in a joint family venture.
Contact Shariff & Associates in Markham Stouffville for Advice on the Matrimonial Home
The family law team at Shariff & Associates understands the complexities of property division and claims to the family home once a relationship has broken down. Our lawyers work with clients to ensure they understand the circumstances in the relationship when advancing a claim to property based on a resulting or constructive trust. To schedule a consultation to find out how we can assist you, contact us online or call us at 905-591-4545.