Important Legislation About Matrimonial Property on Reserves Coming Into Effect

The Family Homes on Reserves and Matrimonial Interests or Rights Act, a fairly new piece of federal legislation, allows First Nations to make rules about homes on First Nations lands and attempts to address a problem that's festered for almost 150 years. Sections 91 and 92 of the Constitution Act, 1867 divides the powers involved in running a country between the federal and provincial governments and, among other things, gives the federal government exclusive authority over "Indians, and Lands reserved for the Indians" and the provincial governments exclusive authority over "Property and Civil Rights in the Province," thereby allowing the provinces to make all the rules they wish about family law and the division of property between spouses but making those rules ineffective on First Nations lands.

The Family Homes on Reserves Act became law on 16 June 2013, with the first bits coming into force on 16 December 2013 and a huge swack, the remainder of the act, coming into force on 16 December 2014. The act applies only to the First Nations that are "bands" as defined by the Indian Act.

Although the act doesn't affect the underlying title to First Nations lands, which continues to be held by the Queen in most of Canada, it does allow First Nations governments to establish laws about how family homes on reserve lands will be used and occupied when a relationship between married or unmarried spouses has broken down. Here's what s. 4 of the act says:

The purpose of this Act is to provide for the enactment of First Nation laws and the establishment of provisional rules and procedures that apply during a conjugal relationship, when that relationship breaks down or on the death of a spouse or common-law partner, respecting the use, occupation and possession of family homes on First Nation reserves and the division of the value of any interests or rights held by spouses or common-law partners in or to structures and lands on those reserves.

(I don't know why federal legislation must be written in such clunky, hard-to-parse language, but there it is.) For First Nations that are listed in the schedule to the First Nations Land Management Act and have the right to manage their lands under a self-government agreement with Canada, the act also provides a lengthy set of provisional rules that apply when the laws the act entitles them to make are not in effect.

Here are the important parts of the act. Sections 1 to 11 and 53 came into force in 2013, sections 12 to 52 come into force tomorrow.

• Sections 7, 8 and 9: First Nations governments can make laws about the use, occupation and possession of family homes located on reserve lands during and after the breakdown of a "conjugal relationship." The laws must be put to a plebiscite, are approved with the support of a majority of the members of the First Nation.
• Section 12: The provisional rules about the use, occupation and possession of family homes set out in sections 13 to 52 apply to First Nations with rights of self-government and are listed in the First Nations Land Management Act and do not have laws about family homes that are in effect.
• Section 13: Each spouse or partner may occupy the family home during their relationship, whether the person is a First Nation member or a status Indian or not. However, the 
• Section 15: A spouse or partner with an interest in or right to the family home, must not sell it or use it as collateral for a lone without the consent of the other person.
• Sections 16 and 17: A spouse or partner can apply for a temporary exclusive occupancy order, including an order for the removal of a person's belongs from the home and an order that a person not go near the home, without notice to the other person if family violence has occurred and order should be made right away. If the judge making the order is a provincially-appointed judge, the judge must send the order and all supporting materials to a judge with the power to make orders under the Divorce Act for a review of the order.
• Section 18: Either spouse or parter can apply to change an exclusive occupancy order.
• Sections 20 and 21: A spouse or partner can apply for a permanent exclusive occupancy order, and the judge hearing the application must consider, among other things, the best interests of the children living in the home, any agreement between the parties, the collective interests of the First Nations members in their reserve lands, the length of time that the person has lived on the reserve and the availability of other accommodation, family violence. The order can include a term requiring the person with exclusive occupancy to keep the home in good condition or requiring either party to pay for the costs of the home. The order can be made to survive the death of the spouse or partner with the interest in or right to the family home.
• Section 23: Exclusive occupancy orders do not change who holds an interest in or right to the family home.
• Sections 28 and 29: When a conjugal relationship breaks down, each party is entitled to an amount equal to one-half of the value of the family home, plus extra rights to the other person's interests in property located on First Nations lands that change depending on whether the party is a member of the First Nation. A court order a different sharing of property interests depending on factors like the length of the relationship, the terms of an agreement between the parties and the debts incurred by each party. 
• Section 30: Applications must be made within 3 years of the date the parties ceased to cohabit. 
• Sections 30 and 31:The court can order that an amount payable under ss. 28 or 29 be paid as a lump-sum, be paid in instalments, be set-off by another amount or be satisfied by the transfer of a property interest or right. The court's ability to transfer property interests or rights is subject to a number of factors relating to the the status of the First Nation, the applicant's status as a member of the First Nation and the circumstances of the parties' relationship.
• Sections 34 to 40: These sections establish rules about estates and the rights of person upon the death of their spouses and partners.
• Section 43: A court with jurisdiction under the Divorce Act has jurisdiction to deal with applications under the Family Homes on Reserves Act.
• Section 48: The court may determine whether a person has a right in a home or land situated on First Nations lands on the application of a spouse or partner, a survivor, an executor of a will, or the counsel of the First Nation on whose lands the home or land is located.

Remember that the provisional rules do not apply to all First Nations, and that both the provisional rules and the First Nations laws on family homes apply in place of the matrimonial property provisions of any provincial legislation.

Cohabitation Agreements and the new Family Law Act:Why you probably want a cohabitation agreement

In a previous post, “Why you DON’T Want a Cohabitation Agreement,” I summarized the law on the division of property between unmarried couples and how s. 120.1 of the Family Relations Act usually made cohabitation agreements a very, very bad idea when the purpose of the agreement was to protect property brought into a relationship. 

That’s all changed as a result of the enactment of the Family Law Act on 24 November 2011. Let me explain.

Property, unmarried couples and the Family Relations Act

Under the Family Relations Act, married spouses are presumed to have a one-half interest in everything that qualifies as a “family asset.” The definition of family asset is so broad, however, that almost everything a married couple has is a family asset whether they bought it after the marriage or brought it into the marriage; most of the time, a married spouse is entitled to half of everything regardless of when and how an asset was acquired.

This isn’t the case for unmarried couples because unmarried couples are expressly excluded from the parts of the Family Relations Act that deal with the division of family assets.

Unmarried couples have no shared interest in any assets except those that they own together. When only one person owns an asset, like the family home, for example, it presumptively remains that person’s sole property, no matter how long the couple lives together.

Unmarried couples, trust claims and unjust enrichment

Of course, after a couple has lived together for five, ten or twenty years, it can seem somewhat unfair that only one of them has an entitlement to the family home, or the family car, or a business or whatever. In a case like this, the person who doesn’t own an asset tries to establish an entitlement by proving the existence of an express trust or a resulting trust, or, more commonly, by proving that the person who owns the asset was unjustly enriched by something the non-owner contributed during the relationship.

All of these claims are difficult to prove, and, even when successful, rarely result in a property interest any where close to the one-half interest the parties would have had if they had been married.

As a result, someone who didn’t want to share the assets being brought into a relationship would simply get some legal advice about how to avoid express and resulting trusts, and make sure that the contributions of the other spouse were always compensated in someway in order to duck an unjust enrichment claim.

Unmarried couples, cohabitation agreements and the Family Relations Act

Despite this rather favourable legal circumstance, people often wanted cohabitation agreements before entering into a long-term, live-in relationship, mostly to address the division of property in the event the relationship ended. Normally, this would be a sensible course of action; wouldn’t it be easier not to have to worry about unintentionally creating a trust relationship or being inadvertently enriched? 

Not so. The problem here lay in a nasty little section of the Family Relations Act, s. 120.1. Under this section, if an unmarried couple made an agreement that dealt with property, the parts of the act that apply to the division of assets between married spouses applied to the unmarried couple making the agreement, and the cohabitation agreement was considered to be a marriage agreement.

This was very bad, for two reasons. First, s. 65(1) of the Family Relations Act expressly allows the court to vary marriage agreements it finds to be unfair. Second, the definition of “fairness” was the presumption of equal entitlement set out in s. 56 of the act which would otherwise have only applied to married spouses.

In a nutshell, as a result of s. 120.1, the standard of property division for married spouses applied to unmarried couples with cohabitation agreements, including certain presumptions about the division of property that would be far worse in effect than what the principles of trust law and unjust enrichment would have yielded in the absence of the cohabitation agreement.

Unmarried couples and the Family Law Act

Under the Family Law Act, unmarried couples that have cohabited for more than two years will have the same property rights as married spouses.

Under the new act, assets brought into a relationship and certain assets acquired afterwards, like court awards and inheritances, will be excluded from division between spouses. The assets that will be divided, and the presumptive division is an equal division, are the assets acquired after the relationship began as well as any increase in the value of the excluded assets.

From the point of view of the person who owns an asset, this is better than the law for married spouses under the Family Relations Act and better than the law for unmarried couples with a cohabitation agreement. However, there can still be some very significant consequences in sharing in the increase in value of an excluded asset — think of what has happened to the value of real estate in the lower mainland over the past 10 years, or the values of stock in Apple, crude oil and your Gretzky rookie card over the same period.

Despite the coming changes in the law, some couples will still want a cohabitation agreement, specifically couples who are in long-term unmarried relationships right now and couples with assets who expect to be in long-term unmarried relationships.

Cohabitation agreements, the repeal of s. 120.1 and the coming-into-force of the Family Law Act

The Family Law Act became law on 24 November 2011. Although most of the act, including all the parts about property division, are not yet in force, other bits came into effect right away, including s. 258 which had the effect of repealing s. 120.1. Fantastic! Since the Attorney General has said that the rest of the Family Law Act isn’t going to come into force for another 12 to 18 months, this means that we’re in the middle of a legislative sweet spot for unmarried couples. 

Unmarried couples may now enter into cohabitation agreements without fear of the grim consequences of s. 120.1, and almost without regard to the property provisions of the Family Relations Act. 

On top of that, unmarried couples probably want to enter into cohabitation agreements if they wish to avoid some or all of the consequences of the property division regime of the new Family Law Act. In other words, if there’s anything about how property will be shared under the new act that browns you off, now is your opportunity to do something about it, and you’ve got 12 to 18 months within which to get it done. 

Get a cohabitation agreement and get it soon

For the next 12 to 18 months, couples across the province will be going through an unpleasant assessment of how their legal rights will fare under the new act. That’s okay, it’s a necessary consequence of change. However, if you are in a relationship of the sort that won’t require you to share your property, that’s going to change too, and if you want to do something about it and don’t want to end your relationship, the time is ripe to get a cohabitation agreement done up.

There will never be a better time to enter into a cohabitation agreement than right now, under the current law and between the repeal of s. 120.1 and the coming-into-force of the property provisions of the new Family Law Act.

Cohabitation agreements are somewhat complicated at the best of times; they’re somewhat more complicated now that we’re in the transition between one legal regime and another. You really must see a lawyer if you want to get a cohabitation agreement drawn up. If you don’t have someone to see, contact the CBA's excellent Lawyer Referral Service at 604-687-3221 or 800-663-1919.

Protecting Property

Important Update: The Family Law Act was introduced on 14 November 2011 and contains a number of provisions which are critical to the comments made in this post. See my posts "The Early and Unlamented Deaths of ss. 90 and 120.1: Government takes quick action on parental support and unmarried persons' property agreements" and "Family Law Act Introduced!" for more information.

When a relationship has come to an end, it's usually a good idea to take steps to preserve the assets available for distribution between the parties. I'm not saying that every time a couple splits up one of them will be up to no good, but it usually pays to be cautious and careful. If your ex does decide to try and play games, it can be expensive to undo the damage. In this post, I'll review some of the common and not so common ways that property can be protected. Note that some remedies are only available to married couples, and that most remedies require the commencement of court proceedings.

File an Entry Under the Land (Spouse Protection) Act

A married spouse can apply for an entry against the title of the family home under the Land (Spouse Protection) Act. The entry will stop the property from being sold without the consent of the person who obtained the entry. Here's the fine print:

• The property must be located in BC.
• The parties must not be divorced at the time of the application.
• The entry only applies to property "occupied by the husband and wife as their residence," and which is owned by one or both spouses.
• The application must be made within one year of moving out of the property.

The cool things about entries under the Land (Spouse Protection) Act are that they can be obtained without commencing a law suit and the other spouse is not normally notified about the entry. The bad news is that the act ceases to apply once a couple are divorced, which means that the entry, although still on title, will be ineffective to prevent the transfer of the property.

Register a Certificate of Pending Litigation
Married spouses and unmarried people can apply to register a certificate of pending litigation under the Land Title Act against the title of any real property to which they claim an interest. Once the CPL is registered, the owner will be unable to transfer title of the property or obtain a new mortgage until the CPL is canceled. Here's the fine print:

• The property must be located in BC.
• Litigation must have commenced in the Supreme Court, and the litigation must include a claim about the property proposed to be subject to the CPL.
• The person applying for the CPL must be claiming an interest in the property in the litigation.

CPLs are registered with the Land Title and Survey Authority, after being stamped by the court where the litigation was commenced to confirm that the litigation includes a claim about the property the CPL is going to be registered against.

Apply for a s. 67 Restraining Order

A married spouse can apply for an order under s. 67 of the Family Relations Act to restrain the other spouse from selling the family assets or using them as collateral. A restraining order doesn't create an automatic bar to selling the family assets or using them to obtain a loan the way a CPL automatically prevents the transfer of land. Instead, if the person subject to the order breaches the order, he or she can be punished for contempt of court. Here's the fine print:

• The restraining order covers real property and personal property located in BC, as well as personal property located outside the province.
• Litigation must have commenced in the Supreme Court.
• You must apply for the order in chambers.

The nice thing about s. 67 orders is that they are all but mandatory on the application of a party. If you need this order, you just have to apply for it and the court will give it to you.

Apply for an Injunction

Married spouses and unmarried people can apply for an injunction under Rule 12-4 of the Supreme Court Family Rules to stop the other party from dealing with assets, and the injunction can theoretically be as narrow or as broad as is required to accomplish the task. Again, the fine print:

• The injunction can cover real property and personal property located in BC, as well as personal property located outside the province.
• Litigation must have commenced in the Supreme Court.
• You must apply for the order in chambers and the court may not make the order you want.
• You must promise to make good any harm the other party suffers as a result of the injunction.

Married spouses and unmarried people can also apply for the same relief under s. 39 of the Law and Equity Act.

Apply for an Order for the Detention and Preservation of Property

Married spouses and unmarried people can apply for order for the detention and preservation of assets under Rule 12-1 of the Supreme Court Family Rules where there is a real risk that the other party will sell, damage or conceal property. The purpose of this order is to protect the assets from loss or a reduction in value, and can include a term requiring a party to deliver a specific thing to the other party. Here's the fine print:

• The order can cover real property and personal property located in BC.
• Litigation must have commenced in the Supreme Court.
• You must apply for the order in chambers and the court may not make the order you want.

Married spouses and unmarried people can also apply for essentially the same relief under s. 39 of the Law and Equity Act.