When a married couple separates, each spouse usually keeps their own property. Still, they share any increase in the value of that property during the marriage term, which results in one spouse giving the other spouse an equalization payment.
A limitation period is a period of time the law allows someone to bring an action against another party in court. The right to bring the claim to court may be invalid if the limitation period has lapsed.
Limitation Period in Family Law
Concerning family law in Ontario, there are limitation periods for claims on the division of property, whether you are married or common law.
When married couples separate or divorce, they divide their properties.
In Ontario, the division of matrimonial property is based on equalizing net family property.
The parties can reach an agreement concerning equalization in mediation, or they can resort to retaining lawyers and attending court if they do not want to negotiate in mediation or an agreement cannot be reached.
Although most people going through a separation or divorce are unaware, under the Family Law Act, a claim for equalization cannot be brought after the earliest of:
- Six years after the parties’ date of separation;
- Two years after a divorce has been granted; or
- Six months after the first spouse’s death.
Failure to claim within the limitation period will ban the claimant from recovering a share of net family property.
The purpose of this limitation period is to give separating spouses some extent of finality and resolution so they can move on with their separate lives.
Despite this provision, the Act does provide for an extension. Under section 2(8), a court has the discretion to grant an extension where:
- There are apparent grounds for relief;
- Relief is unavailable because of a delay that has been incurred in good faith; and
- No person will suffer substantial prejudice because of the delay.
The party seeking the extension must prove these benchmarks on a balance of probabilities.
The rules about the division of property, including the matrimonial home, do not apply to common-law couples.
In a common-law relationship, the property a party brings into the relationship, plus any increase in its value, usually continues to belong to that one part alone.
Common-law spouses have no statutory right to an equalization payment.
For common-law spouses, the law (who are ineligible to equalize their individual net family properties in Ontario) or married spouses (where trust claims are open to them), different limitation periods are applicable depending on the following.
The date of discoverability usually is the separation date.
- Where an interest in land through a constructive trust is sought, there is a 10-year limitation period from the discovery of the claim.
- Where monetary compensation only is sought, there is a two-year limitation period from the discovery of the claim.
- Where a constructive trust in an asset other than land (ex: RRSP, corporate shares, or pension) is sought, there is a two-year limitation period from the discovery of the claim.
To obtain legal advice on limitation periods and equalization, it is best to speak with a lawyer.