Property Agreements

Spouses can make an agreement to divide all or some of their family property in whatever way they think is best. Certain agreements are given more weight by the court if they meet the requirements set out by law. However, even if the agreement does not, the court can still consider it.

When spouses separate, they may sign an interspousal contract to settle family law issues. This type of contract must meet certain requirements set out in The Family Property Act. If it meets these requirements, it is presumed to be enforceable. For a valid interspousal contract to exist:

• the contract must be in writing and be signed by each spouse in front of a witness
• each spouse must get independent advice from their own lawyer before signing the contract
• each spouse must then acknowledge in writing, apart from the other spouse, that they have received independent legal advice and that they understand the contract and its effect on their rights

The court will usually not interfere with property dealt with under an interspousal contract. The exception to this is if the contract was grossly unfair and one-sided at the time it was made.

Spouses can also sign an agreement that does not meet the requirements for an interspousal contract. The Family Property Act states that the court can consider these types of agreements when dividing property. The court will give the agreement whatever weight it considers reasonable.

In these cases, the court first considers if a valid agreement has been made according to the general rules of contract law. Basic things like whether the parties actually came to an agreement would be considered at this stage.

If there is a valid agreement, the court would then go on to look at whether the circumstances under which it was made were unfair to one of the parties. The party who is saying it was unfair would need to show that there was a factor at play like:

• undue pressure
• exploitation of a power imbalance or other vulnerability
• something that prevented the party from understanding some essential part of the agreement

The fact that the parties did not have legal advice or that there was no disclosure are alone not enough to show that the agreement is unfair.

If the agreement was not created unfairly, the court would then look at the division the parties agreed to. How the property was dealt with still needs to fall within the range of fair and equitable possibilities under The Family Property Act. The fact that the agreement does not divide everything equally does not alone mean that it should not be considered.

Sometimes, the parties are already aware of assets that may be family property. If not, then full disclosure by both spouses will make the court more likely to follow an agreement. Agreements will often state that they only cover assets that were disclosed. It is important for both spouses to have a complete picture of the family property and its value, including:

• all real property
• general household goods and vehicles
• bank accounts and savings
• pension and retirement savings plans
• securities
• life and disability insurance
• business interests
• accounts receivable
• other property

While debts do not count as family property, they must still be factored into a property agreement. The Property Statement is a document that is filed with court applications involving family property. However, spouses can also use it as a kind of worksheet to set out all the assets and debts when making an agreement. Once spouses have a clear picture of all their debts and assets, they can decide how to divide them.

Agreements should cover things such as:

• any assets that are in the name of only one spouse that will stay in the name of the spouse who currently has title
• any assets that are in the name of only one spouse that will be transferred to the other spouse
• any joint assets that will be transferred to the name of one spouse only
• how any transfers will be done, such as which spouse is responsible for the paper work, legal expenses and other costs, and so on
• how assets that are not in the name of either spouse, such as furniture and artwork, will be divided
• any assets that will be sold, as well as the process for the sale and how the proceeds will be divided or used to pay debts
• any cash payments one spouse will make to the other spouse to equalize the value each will receive, as well as when and how these payments will be made
• any debts that will be paid out and how this will be done, such as who will be responsible for doing this, where the money will come from and when this will be done
• which spouse is responsible, as between the spouses, for which remaining debts and what will happen if the lender requires the other spouse to pay the debt
• the spouses being both free to acquire property in the future without any claim from the other
• assets that are not disclosed at the time of the agreement are not covered by the agreement

This is not a complete list of things to include in an agreement. You should have a lawyer review your agreement.

Even if you cannot reach an agreement on the division of property, you may be able to agree on the value of the property. This can be done with or without the assistance of professionals, such as appraisers and accountants. This could simplify a court application for a division of property.