The Family Property Act
When married or common law spouses separate, an issue that often arises is how to divide their property. The Family Property Act (the “FPA”) is the legislation in Saskatchewan that governs that division of property upon a
separation. The overarching purpose of the FPA is to recognize that both spouses make contributions to the relationship and to the family, though those contributions may take different forms. For example, one spouse may contribute more in terms of finances, while another spouse may contribute more to child-care or to household management. All contributions to the relationship are recognized under the FPA. As a result, the starting point for determining the appropriate division of family property is a presumption of equal division, subject to certain exceptions.
Who can apply for family property division?
In order to apply to divide property under the FPA you must be a “spouse”, which for the purposes of the FPA means either a married couple or a couple who has cohabitated together as spouses for at least two years (a “common law spouse”). The FPA applies only to people who fall into those two categories. If the parties are not married and it is unclear whether they have been cohabitating as spouses for at least two years, there are a number of factors the court will look at to determine whether the parties qualify as spouses, including but not limited to: economic interdependence, commitment to the relationship, sharing of a common residence, a sexual relationship, and recognition of the relationship by family and friends. The specific facts of each case will determine whether a spousal relationship exists.
Common law spouses have two years from the date of separation to apply for family property division. Married couples must apply for family property division before they are divorced.
Family property other than the family home or household goods
“Family property” is defined in the FPA as being any real or personal property owned by one or both spouses at the time an application is made under the FPA. This includes RRSPs, pensions, bank accounts, real estate, household goods, inheritances and interests owned in businesses or trusts. Notably, the FPA divides property; it does not divide debt.
The value of family property that was brought into the relationship by one spouse is generally exempt from family property division (provided the exemption can be traced to property that exists at the date of application). If property previously owned by one spouse increases in value during the spousal relationship, the increase in value will still be divisible between the spouses. However, exemptions do not apply to the family home or to household goods. Property which has been dealt with in an interspousal contract may also be exempt from division.
There is a presumption that family property will be divided equally unless it is legally unfair or inequitable to do so. What is legally unfair may be very different than what an individual considers to be unfair. The spouse asking for an unequal division of property will have to prove that an equal division would be unfair in the circumstances. There is a list of factors at section 21(3) the FPA that the court will consider in making an order for unequal division of family property, including but not limited to:
- The length of time the spouses have cohabitated;
- The amount of time the spouses have lived separate and apart;
- The date the family property was acquired;
- The contributions made by third parties to the family property;
- The fact that a spouse has transferred property to a third party; and
- The extent to which each spouse’s financial means or earning potential has been impacted by the relationship.
Each case will be decided on its specific facts within the context of the factors set out above. In dividing family property, it is important to note that the court will not consider a spouse’s improper or immoral conduct unless there are financial consequences. One example of conduct that may weigh in favour of an unequal division of family property is if one spouse has been “dissipating” or squandering family property.
The family home and household goods
The family home and household goods are dealt with separately from other family property. There is an even stronger presumption that the equity in the family home and the household goods will be divided equally, with exception only in extraordinary circumstances or where it would be unfair to the spouse who has custody of the children. It does not make a difference whether the family home is held in joint names or in the sole name of one of the spouses. If title to the family home is in the sole name of one spouse, that spouse cannot sell the family home without the consent of the other spouse.
The family home is defined in the FPA as being the property owned and occupied by one or both spouses and intended for use as the family home. As mentioned earlier, there is no exemption for the family home. Any equity that was acquired during the spousal relationship will be subject to family property division, regardless of which spouse made the payments.
It is also possible under the FPA to apply for exclusive possession of the family home and/or exclusive use of household goods. The court will consider the needs of the children, the conduct of the spouses (including whether there is any family violence), the availability of other accommodations, the financial condition of the spouses and any agreements or orders previously made. The court may order, among other things, that one spouse vacate the family home or be restrained from entry. The court may also decide the terms of possession, including who will be responsible for house payments going forward. Until a court order or an agreement is made, both spouses have equal right to the family home.
Valuation of property
As part of the process for family property division, spouses must provide property statements describing the family property they have, the value of the property, and any debts. Property will be valued by default at the date of application unless there are special circumstances where valuation at the date of trial would be appropriate. Valuation will generally be based on the market value, which is the value that the property would sell for (not replacement value).
Notably, property is not valued at the date of separation under the FPA. Rather, under the FPA family property continues to accumulate until such time as either spouse applies for division under the FPA.
Though family debts are not considered family property, debts may be accounted for in the distribution of the family property. For example, if one party is taking responsibility for a large family debt, they may receive more equity as part of the equalization process. The amount of the debts taken on by each spouse will generally be subtracted from their share of the family property so that each spouse gets a similar amount of total value.
Can you contract out of the FPA
One way to determine how family property will be divided is by agreement of the spouses, as long as the agreement follows the rules set out by the FPA. Family property distributed pursuant to a valid interspousal contract is then exempt from division under the FPA. A valid interspousal contract must be in writing and signed by each spouse in the presence of a witness. Both spouses must also receive independent legal advice before signing the contract. Interspousal contracts can deal with possession, ownership, management or distribution of family property between spouses and can be entered into at anytime before the spousal relationship begins (i.e. a “prenup”), during the spousal relationship, or after separation. If spouses have not made an interspousal agreement that determines how property will be divided, either spouse can apply under the FPA for division of family property.
STEVENSON HOOD THORNTON BEAUBIER LLP
500 – 123 2nd Avenue South, Saskatoon, SK S7K 7E6
The information in this guide is not legal advice. We encourage you to consult with your legal advisor for specific advice.