Picture this: You’re a young professional in the big city. When you’re not too busy working, you like to relax and enjoy the occasional avocado toast. By some miracle (or a generous donation from the Bank of Mom & Dad) you’ve saved up for a down payment and have finally entered the Southern Ontario real estate market. Thanks to your new mortgage payments, you’ve traded in the avocado toast for beans on toast.

Then low and behold, your last Tinder match has actually worked out and is moving in at the end of the month and you’ve finally got someone you can charge “rent’ to help with those mortgage payments. You spend a blissful few years together but ultimately, the spark fades and you decide to go your separate ways and you have to re-download Tinder. But at least you got some money out of them to help with the mortgage, right? Well, maybe not so fast…

While many Canadians assume only married couples have legal interests in each other’s property, the law in Canada permits non-married couples to make claims on the other’s property interests. Now suddenly your ex is making what is known as an unjust enrichment claim based on the financial contributions they made to the property you worked so hard (or hustled and mooched off your parents) for.

So what exactly is an unjust enrichment claim?

A claim for unjust enrichment is made out when your ex shows that:

  1. You have received a benefit (i.e. financial contribution to your home from your ex);
  2. They have suffered a corresponding deprivation (i.e. they contributed to paying the mortgage, but since they aren’t on title, will not share in the increase in equity); and
  3. An absence of juristic reason for the enrichment (i.e. that there is no good explanation based upon law for your enrichment, to the detriment of your ex).

If your ex is successful, they can be entitled to a constructive trust, which is effectively an interest in your property, or monetary compensation from you.

There is no minimum number of years that you need to have been cohabiting in order for a party to make a claim for unjust enrichment. However, the amount contributed by your partner will likely be larger the longer you live together, which will lead to a larger potential claim.

How does an unjust enrichment claim arise?

A common way for such a claim to arise is that you, as the property owner, make the assumption that when your new soul mate contributes financially, they are simply paying you “rent” which you use to pay the mortgage. The problem is that your now ex-soul mate assumed they were directly contributing to the mortgage and would be sharing in the equity.

To make things more confusing, your partner doesn’t have to contribute specifically to the mortgage in order for an unjust enrichment claim to arise. For example, if your partner financially contributes to or even puts significant time and work into a renovation, they can make a claim of unjust enrichment.

How do I protect myself?

The best way to protect your property (and yourself, from the wrath of your parents in the event they gave you the down payment) is to clearly set out you and your partner’s understanding of their financial contributions to your property before or shortly after moving in together. The best way to clearly set out your intentions for the property is through a written cohabitation agreement prepared by a lawyer (the Canadian version of a pre-nup).

If you have questions about moving in with a new partner, including questions about preparing a cohabitation agreement, contact the family law group at Mills & Mills LLP. We work to find solutions that work for our clients and their families. For more information on the services provided by our experienced family law lawyers, please contact us at 416­-863-0125 or send us an email.

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