Mike and Melanie moved in together 12 years ago, excited to start a new life together. Neither saw the need for a ceremony, expensive party and a piece of paper to tell them how much they were in love. Mike already owned a house and when Melanie moved in, she started to contribute to household bills, helped out with the mortgage and bought furniture and other things to add a little feminine touch. It was unwedded bliss.

After a few years, they renovated the basement to create more living space. Melanie contributed both money and labour to this upgrade, which greatly improved the value of the property.

Now, 12 years later, their relationship has broken down and Melanie wants out. Since they were de facto married at this point, with shared benefits and shared taxes, Melanie assumed she would get half of everything they owned, including the house she helped improve and maintain.

Mike didn’t want to sell so he engaged a lawyer to understand his rights. Turns out, as I’m sure you have surmised, the cards are in Mike’s favour here.

In a common-law relationship, you own what you pay for. There is no splitting of assets equally between the parties as there is for married couples. This also applies to any increase in the value of an asset, even if you contributed to that increase. Basically, if you bought it, you keep it; and if you bought it together, you divide it.

Yet, there are always exceptions. So, what does this mean for Melanie?

Mike is the only one on title for the home; therefore, he is entitled to keep the home even though Melanie paid into it and helped improve its worth. However, because she contributed significantly to the home, she is not without recourse.

A first step would be to ask Mike directly for some compensation in consideration of her contribution. If an agreement cannot be reached, Melanie could then decide to make a claim under a principle called unjust enrichment in which she would need to show how she contributed to the property, how Mike benefited from that contribution and that he should not be entitled to keep that benefit alone. The courts will then decide what Melanie’s fair share should be.

As in most situations, avoiding the courtroom is better for all parties (except maybe the lawyers!). One way to avoid this scenario is to start with a cohabitation agreement when you decide to move in with someone. This agreement - like a prenup for married couples - sets out how property and assets are to be dealt with should the parties separate.

While no one enters a relationship thinking about separation or divorce, there is a business side to it that should not be ignored. Life happens. And while you may think the other party will do the “right” thing should the relationship not work out, the emotions that arise out of a breakup often prove otherwise. Protecting yourself just in case is never a bad decision.