Protecting Property and Debt in Family Law Matters: Difference between revisions
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{{JP Boyd on Family Law TOC|expanded = assets}}{{JPBOFL Editor Badge | {{JP Boyd on Family Law TOC|expanded = assets}}{{JPBOFL Editor Badge | ||
|CoAuthor = [[Trudy Hopman]] | |||
|ChapterEditors = [[Helen Chiu]] and [[Matthew Ostrow]] | |ChapterEditors = [[Helen Chiu]] and [[Matthew Ostrow]] | ||
}}{{LSSbadge | }}{{LSSbadge | ||
| resourcetype = a fact sheet on | | resourcetype = a fact sheet on | ||
| link = [ | | link = [https://family.legalaid.bc.ca/finances-support/property-debt Property & debt] | ||
}}It's sometimes necessary to take steps to protect family property, family debt, and excluded property until a final agreement or order dividing assets is made. Failing to take these steps can sometimes result in property being sold, diminished in value, used as collateral for a loan, moved out of province, or being seized by a trustee in bankruptcy or by a creditor. Most of the time it only becomes important to protect property after a couple has separated. | }}It's sometimes necessary to take steps to protect family property, family debt, and excluded property until a final agreement or order dividing assets is made. Failing to take these steps can sometimes result in property being sold, diminished in value, used as collateral for a loan, moved out of province, or being seized by a trustee in bankruptcy or by a creditor. Most of the time it only becomes important to protect property after a couple has separated. | ||
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===Register your interest in property=== | ===Register your interest in property=== | ||
Registering an interest in real property will stop the property from being sold and may prevent the property from being borrowed against. The two most common ways to do this are by filing an entry under the ''[ | Registering an interest in real property will stop the property from being sold and may prevent the property from being borrowed against. The two most common ways to do this are by filing an entry under the ''[https://canlii.ca/t/8451 Land (Spouse Protection) Act]'' with the Land Title and Survey Authority, or by filing a Certificate of Pending Litigation under the ''[https://canlii.ca/t/8456 Land Title Act]'' with the Land Title and Survey Authority. | ||
====Entries under the ''Land (Spouse Protection) Act''==== | ====Entries under the ''Land (Spouse Protection) Act''==== | ||
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====Certificates of pending litigation under the ''Land Title Act''==== | ====Certificates of pending litigation under the ''Land Title Act''==== | ||
Where a court proceeding has started in the Supreme Court, a ''Certificate of Pending Litigation'' (CPL), formerly called a ''lis pendens'', can be registered against the title of any property owned by you and your spouse or your spouse and a third party (such as a parent) at the Land Title and Survey Authority. As long as you have asked for a CPL in your Notice of Family Claim or Counterclaim and made a claim for the division of family property, you will be entitled to register a CPL. If title to the property is registered in the name of your spouse and a third party, you must name the third party as a party in the Notice of Family Claim or Counterclaim if you wish to seek relief against the third party vis-à-vis the property. | Where a court proceeding has started in the Supreme Court, a ''Certificate of Pending Litigation'' (CPL), formerly called a ''lis pendens'', can be registered against the title of any property owned by you and your spouse or your spouse and a third party (such as a parent) at the Land Title and Survey Authority. Section 215 of the ''[https://canlii.ca/t/8456 Land Title Act]'' deals with CPLs. As long as you have asked for a CPL in your Notice of Family Claim or Counterclaim and made a claim for the division of family property under the ''[[Family Law Act]]'', you will be entitled to register a CPL. If title to the property is registered in the name of your spouse and a third party, you must name the third party as a party in the Notice of Family Claim or Counterclaim if you wish to seek relief against the third party vis-à-vis the property. | ||
The effect of a CPL is to announce to anyone interested in the property, such as a mortgagee or a creditor or a potential buyer, that ownership of the property may change as a result of the litigation. This discourages and usually prevents the | The effect of a CPL is to announce to anyone interested in the property, such as a mortgagee or a creditor or a potential buyer, that ownership of the property may change as a result of the litigation. This discourages and usually prevents the registered owner's ability to sell the property or mortgage it. | ||
You can file your CPL at the same time as you file your Notice of Family Claim or Counterclaim. The registry will stamp your CPL, | The BC Supreme Court offers a [https://www.bccourts.ca/supreme_court/self-represented_litigants/sc_info_packages/cpl_package.pdf CPL information package] on its website. You can file your CPL at the same time as you file your Notice of Family Claim or Counterclaim. The registry will stamp your CPL, but it must then be filed with the Land Title and Survey Authority (LTSA) along with a copy of the Notice of Family Claim or Counterclaim. Because a CPL is a ''charge'' against the title that has serious implications, and because the LTSA has now moved to requiring that almost all its filings need to be done online, there are restrictions on who the LTSA authorizes to certify the formal documents. Practically speaking, you will need a lawyer or notary public to help you actually file the CPL with the LTSA. | ||
The owner or owners of the property on which a CPL has been registered against title are given notice of the CPL by mail. | |||
====Notices and financing statements under the ''Family Law Act''==== | ====Notices and financing statements under the ''Family Law Act''==== | ||
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Spouses who have made a cohabitation agreement, a marriage agreement, or a separation agreement dealing with real property can file a ''notice'' of the agreement against the title of the property with the Land Title and Survey Authority under section 99 of the ''Family Law Act''. A notice can be filed whether court proceedings have started or not, and will prevent the other spouse from transferring, selling, leasing, or otherwise dealing with the property without the voluntary cancellation of the notice or a court order. | Spouses who have made a cohabitation agreement, a marriage agreement, or a separation agreement dealing with real property can file a ''notice'' of the agreement against the title of the property with the Land Title and Survey Authority under section 99 of the ''Family Law Act''. A notice can be filed whether court proceedings have started or not, and will prevent the other spouse from transferring, selling, leasing, or otherwise dealing with the property without the voluntary cancellation of the notice or a court order. | ||
A ''financing statement'' can be filed in the [ | A ''financing statement'' can be filed in the [https://www2.gov.bc.ca/gov/content/employment-business/business/managing-a-business/bc-registry-services-personal-property-registry Personal Property Registry] against a manufactured home under section 100. A manufactured home is a structure like a mobile home or trailer home that is designed to be lived in but also towed or carried from one place to another. A filed financing statement will stop the manufactured home from being transferred, and any new debts registered against it will come in second in priority to the spouse's interest under the financing statement. | ||
===Make sure the rent gets paid and the lights stay on=== | ===Make sure the rent gets paid and the lights stay on=== | ||
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The courts of this province will, however, usually compensate a spouse for an interest in out-of-province property by reapportioning the property that the court can deal with, property located inside British Columbia, to compensate for the property that it can't deal with. Here's an example: | The courts of this province will, however, usually compensate a spouse for an interest in out-of-province property by reapportioning the property that the court can deal with, property located inside British Columbia, to compensate for the property that it can't deal with. Here's an example: | ||
<blockquote>Zygmunt has a farm in Flin Flon, Manitoba worth $50,000. Zygmunt and Ivan both own the family home in Vernon, British Columbia worth $ | <blockquote>Zygmunt has a farm in Flin Flon, Manitoba worth $50,000. Zygmunt and Ivan both own the family home in Vernon, British Columbia worth $400,000. Assuming both properties were bought after the relationship began and that both are family property, under an equal division, each of the spouses would be entitled to $25,000 for the farm in Manitoba and $200,000 for the family home in British Columbia.</blockquote> | ||
<blockquote>Since the court can't normally make an order requiring the sale or transfer of the property in Flin Flon, an equal division of the assets in this jurisdiction would give each spouse $ | <blockquote>Since the court can't normally make an order requiring the sale or transfer of the property in Flin Flon, an equal division of the assets in this jurisdiction would give each spouse $200,000, half the value of the family home, but this would short Ivan of his interest in the farm. To avoid this unfairness, the court could simply divide the family home in Vernon in favour of Ivan, and give him a $225,000 share rather than an equal share.</blockquote> | ||
<blockquote>This would reapportion the value of the property the court can deal with (the family home) to compensate Ivan for the interest he ought to have in the property the court can't deal with (the farm). Zygmunt is still left with half of the family property, as he remains the sole owner of the farm, $50,000, and gets a $ | <blockquote>This would reapportion the value of the property the court can deal with (the family home) to compensate Ivan for the interest he ought to have in the property the court can't deal with (the farm). Zygmunt is still left with half of the family property, as he remains the sole owner of the farm, $50,000, and gets a $175,000 share of the family home, for a total property interest of $225,000.</blockquote> | ||
In truly exceptional circumstances, it is possible to get an order stopping someone from disposing of real property located outside the province with something called a "''Mareva'' injunction." A ''Mareva'' injunction will stop someone from selling or encumbering assets outside of British Columbia, providing that certain conditions are met. (The name of this order comes from an old English case in which the relief was first granted, ''[https://perma.cc/WK3R-48XF Mareva Compania Naviera S.A. v. International Bulkcarriers S.A.]'', [1980] 1 All E.R. 213). To qualify for this order, you must: | In truly exceptional circumstances, it is possible to get an order stopping someone from disposing of real property located outside the province with something called a "''Mareva'' injunction." A Supreme Court judge would not rely on the authority of the ''Family Law Act'' to do this, and instead rely on section 39 of the ''[https://canlii.ca/t/8459 Law and Equity Act]'' and the broader authority of ''inherent jurisdiction'' that all judges of Canada's superior courts possess. A ''Mareva'' injunction will stop someone from selling or encumbering assets even outside of British Columbia, providing that certain conditions are met. (The name of this order comes from an old English case in which the relief was first granted, ''[https://perma.cc/WK3R-48XF Mareva Compania Naviera S.A. v. International Bulkcarriers S.A.]'', [1980] 1 All E.R. 213). To qualify for this order, you must: | ||
#show a strong case for your entitlement to a share of those assets, | #show a strong case for your entitlement to a share of those assets, | ||
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Where a spouse has attorned, the court can make a restraining order stopping the spouse from disposing of movable property located outside of British Columbia under section 91 of the ''Family Law Act''. Inside British Columbia, a section 91 order will stop a spouse from dealing with everything that is family property or other ''property at issue'', including real property. Outside British Columbia, a section 91 restraining order will only stop a spouse from dealing with movable assets. | Where a spouse has attorned, the court can make a restraining order stopping the spouse from disposing of movable property located outside of British Columbia under section 91 of the ''Family Law Act''. Inside British Columbia, a section 91 order will stop a spouse from dealing with everything that is family property or other ''property at issue'', including real property. Outside British Columbia, a section 91 restraining order will only stop a spouse from dealing with movable assets. | ||
The court can be reluctant to issue a section 91 order that is intended to deal with assets located outside the province, since in most cases the courts of British Columbia cannot make orders about things located outside the province. In a | The court can be reluctant to issue a section 91 order that is intended to deal with assets located outside the province, since in most cases the courts of British Columbia cannot make orders about things located outside the province. In a 2001 case called ''[https://canlii.ca/t/50dw Boyd v. Boyd]'', 2001 BCCA 535, the Court of Appeal confirmed that the court can make ''in personam'' restraining orders that are effective against movable assets located outside the province. | ||
It is important to remember that a section 91 order is an ''in personam order'', which means that it is only effective against the person to whom the order is being made. Accordingly, if your spouse has a significant amount of money in a bank account, | It is important to remember that a section 91 order is an ''in personam order'', which means that it is only effective against the person to whom the order is being made. Accordingly, if your spouse has a significant amount of money in a bank account, investment account, or similar type of savings vehicle, and you are concerned that your spouse will transfer the monies somewhere else even if there is an order in place, then you should ensure that the financial institution where the accounts are being held are named in the notice of application, the financial institution is served with your application, and that you seek specific relief vis-à-vis the financial institution. Otherwise, the financial institution does not have any legal obligation to prevent your spouse from transferring assets out of the financial institution. | ||
If a section 91 order is not available for some reason, a ''Mareva'' injunction will have the same effect. However, ''Mareva'' injunctions are not granted automatically and you must satisfy the test described just above. | If a section 91 order is not available for some reason, a ''Mareva'' injunction will have the same effect. However, ''Mareva'' injunctions are not granted automatically and you must satisfy the test described just above. | ||
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* ''[[Family Law Act]]'' | * ''[[Family Law Act]]'' | ||
* ''[[Divorce Act]]'' | * ''[[Divorce Act]]'' | ||
* ''[ | * ''[https://laws-lois.justice.gc.ca/eng/Const/index.html Constitution Acts, 1867 to 1982]'' | ||
* ''[ | * ''[https://canlii.ca/t/8456 Land Title Act]'' | ||
* ''[https://canlii.ca/t/8451 Land (Spouse Protection) Act]'' | |||
===Resources=== | |||
* [https://www.bccourts.ca/supreme_court/self-represented_litigants/sc_info_packages/cpl_package.pdf CPL information package] from BC Supreme Court | |||
===Links=== | ===Links=== | ||
*[ | *[https://www2.gov.bc.ca/gov/content/employment-business/business/managing-a-business/bc-registry-services-personal-property-registry BC Personal Property Registry website] | ||
*[ | *[https://dialalaw.peopleslawschool.ca/dividing-property-and-debts/ Dividing property and debts] from Dial-A-Law by the People's Law School | ||
*[ | *[https://perma.cc/PAF8-EULG Parenting After Separation Handbook: Finances] from the Justice Education Society of BC | ||
*[ | *[https://family.legalaid.bc.ca/finances-support/property-debt Property & debt] from Legal Aid BC’s Family Law website | ||
{{REVIEWED | reviewer = [[ | {{REVIEWED | reviewer = [[Trudy Hopman]], October 19, 2023}} | ||
{{JP Boyd on Family Law Navbox|type=chapters}} | {{JP Boyd on Family Law Navbox|type=chapters}} | ||
