Are Beneficial Interests in Property Excluded Assets?

Family Law


Tim Goepel acted as counsel for a client who purchased a pre-sale condominium one year before his marriage. Initially, the completion date was scheduled to occur prior to the marriage. Due to delays in construction, none of which were attributable to the client, the purchase of the condominium completed after he was married.

The marriage eventually ended and a trial date was set to resolve the division of assets. Lindsay Kenney lawyer effectively negotiated a resolution in favour of our client excluding the condominium as an asset pursuant to section 85 of the Family Law Act.


Section 85 (1) of the Act excludes from the definition of family property “property acquired by a spouse before the relationship between the spouses began;”

We argued that our client’s beneficial interest in the property was acquired prior to the parties marrying and thus the beneficial interest was excluded under the Family Law Act.

The law provides that upon execution of a contract the purchaser obtains an immediate equitable interest in the land, subject to perfection of defeasance of title on the performance or non performance of contractual obligations (see: Ontario Court of Appeal case in Aldercrest Developments Ltd. v. Hunter et al., 1970 CanLII 234).

In Pan Canadian Mortgage Group III Inc. v. 0859811 B.C. Ltd., 2014 BCCA 113, the British Columbia Court of Appeal was dealing with a purchasers lien issue and held in relation to uncompleted contracts of purchase and sale at paragraph 32 citing older English authority that “When the owner of an estate contracts with a purchaser for the immediate sale of it, the ownership of the estate is, in equity, transferred by that contract.”

The Supreme Court of Canada in Hanson v. Cameron, [1949] SCR 101, in dealing with the transfer of timber licences held as follows: “While by the terms of the agreement title to the timber felled on the limit was not to pass to the purchaser until the agreed stumpage and royalty charges had been paid, the purchaser, in my opinion, acquired under the agreement an equitable estate in the interest in land which was the subject matter of the sale and became in the eyes of a court of equity the real beneficial owner, the vendor being a trustee of such interest for him (McKillop v. Alexander)”

This is consistent with the principal that you can transfer as equitable interest under a presale agreement, wherein it was held in 411076 B.C. Ltd. v. McCullagh, 1992 CanLIi 810  “Absent a provision in an interim agreement of sale against assignment a purchaser is at liberty to assign his contractual rights as an equitable interest in land, Paine v. Mellor (1801), 31 E.R. 1088; McKillop and Benjafield v. Alexander (1912), 1912 CanLII 31 (SCC)”

During settlement discussions prior to the commencement of the trial the opposing party agreed and accepted that the condominium was excluded from the family property. The agreement reflected that the asset (the condo) was excluded and that opposing party could only seek an interest in the increase in the value of the condo.  The wife received a portion of the increase in value only saving the client over $50,000 and the need for a trial.

If you have concerns with a family law matter, contact a member of the family law team.