I Owned the Home Before We Married – Why Does My Spouse Get a Share of It? We are all familiar with the skyrocketing price of homes in Toronto and the surrounding area. It is not a simple feat to purchase a home – it requires a lot of hard work and obviously, money. Picture this: you work your way through school, spend years in full-time employment, finally earn enough income to secure a home, make mortgage payments on your own for several years, meet your partner, marry said partner, separate from said partner, and then you lose a large portion of equity in your home to that partner. For many, this is an unfortunate reality and the reason why is something our clients should be aware of, given that the family home is most often a couples’ most significant asset. In Ontario, there are special rules in respect of the treatment of the matrimonial home upon marriage dissolution. The Family Law Act defines a “matrimonial home” as follows: “Every property in which a person has an interest and that is or, if the spouses have separated, was at the time of separation ordinarily occupied by the person and his or her spouse as their family residence is their matrimonial home.” It is important to note that a couple can have more than one matrimonial home. A cottage for example, ordinarily occupied by both spouses, can be a matrimonial home. A hunting cabin only ever used by one spouse on the other hand would not be considered a matrimonial home. Under the law in Ontario, a couple’s property is not divided upon separation, but rather, the value of that property and more specifically, the growth in value of property that spouses share is divided. What this means is that if the title to the matrimonial home is in your name (perhaps you owed it before the marriage), it stays in your name (subject to some claims your spouse could make if he or she made significant contributions to the property), but your spouse has a right to claim a share in the value of a matrimonial home as part of an equalization payment dividing property. Absent a marriage contract, the entire equity in a matrimonial home is always included in the value of assets that married spouses share. With almost every other type of asset, spouses only share in the growth in value during the marriage. Take for example an art collection – purchased by both spouses – this is something you and your partner would share the wealth in. The matrimonial home on the other hand is not. Section 5(2) of the Family Law Act does not allow a spouse to get any credit for bringing a property into the marriage if that property was a matrimonial home on the date of separation. So, without a marriage contract, a couple will share whatever value is in the matrimonial home. Unless the matrimonial home is jointly owned, there is no right to “half” the home but instead, a right to have whatever equity lies within the home included in property/asset division. In terms of possession of the home, both spouses have an equal right to possession pursuant to section 19 of the Family Law Act. What this means is that one spouse cannot unilaterally exclude the other from the matrimonial home, even if they own it. A spouse (whether on title or not) can also apply to the court for exclusive possession of the matrimonial home (s. 24 of the Family Law Act). A court order for exclusive possession has the effect of excluding a spouse from the property for a period of time as determined by the court. If you are planning on getting married and own a home, you may want to consider putting protections in place and these protections would come in the form of a marriage contract. A marriage contract – entered into in anticipation or marriage or after a marriage has already happened – can exclude the matrimonial home from a spouses net family property. This would have the effect of the spouses not sharing in the equity in the home on date of separation. If the marriage contract is done properly, which requires the help of a lawyer, then judges usually think that giving a spouse credit for bringing the home into the marriage is fair. For more information regarding divorce, property division, marriage contracts or any other family law related topic, contact Toronto family lawyer John Schuman at 416-446-5080 or John.Schuman@devrylaw.ca. “This article is intended to inform. Its content does not constitute legal advice and should not be relied upon by readers as such. If you require legal assistance, please see a lawyer. Each case is unique and a lawyer with good training and sound judgment can provide you with advice tailored to your specific situation and needs.” By Fauzan SiddiquiBlog, Family LawMarch 5, 2019July 5, 2023
How is the Money from the Sale of a House Divided in a Divorce? Family lawyer John Schuman was recently asked this question: I bought my home in 1995 and it became the matrimonial home when i married my husband in 2009. I’m filing for divorce now and selling the house. Is the money from the sale of the house split 50/50 or will I receive a bit more being the original owner of the house? My husband is on the mortgage as well. Answer by John Schuman: When married couples separate in Ontario, the home (or homes – there can be more than one) that they live in on the day they separate gets special treatment in property “equalization” process. (Non-married or common-law couples may not divide property or may do it differently.) Those special rules may make it seem that matrimonial homes are divided “50/50”, but that is not actually how it works. The property division provisions of Ontario’s Family Law Act do not give married people any right of ownership over their spouses’ property or other assets. If title to the matrimonial home is in your name, it stays in your name, subject to some claims your spouse can make if he or she makes significant contributions to that property. Just being married does not mean spouses both own their home (or homes). Watch this video for more details on how Ontario Law divides the value of property, not the property itself, on separation. There are a number of special rights that attach to matrimonial homes (or homes). One is that neither spouse can kick the other out of matrimonial home, or secure debt against a matrimonial home, without the other spouse’s consent or a court order. The reason people think they share the equity in matrimonial homes 50/50 is that, absent a marriage contract, the entire equity in a matrimonial home is always included in the value of assets that married spouses share. With almost every other type of asset, spouses only share in the growth in the value during the marriage. However, section 5(2) of the Family Law Act does not allow a spouse to get any credit for bringing a property into the marriage if that property was a matrimonial home on the date of separation. So, without a marriage contract, spouses share whatever value is in their matrimonial homes. Spouses do not necessarily have to give their spouses “half the house” on separation. That spouse is entitled to stay in the house, and to have the equity included in property division, but, if a home is not jointly owned, there is not right to “half of it.” It is just included in the assets to be divided. So, if the spouse who does not own the matrimonial home has lots of savings or a pension to include in his or her assets to be divided, that may offset the value in the matrimonial home. If the spouse who owns the matrimonial home had a lot of assets (other than the matrimonial home) on the date of marriage, his or her increases in net worth may be less than the other spouse, which would mean the home would not be divided. The same may be also be try if the spouse who owns the matrimonial home has a lot of debt on separation may not have the increase in net worth that is necessary to owe the other spouse anything. But, in short term marriages, there is a real danger that a spouse can walk away being entitled to half the other spouse’s home. If the marriage was short, the couple may still live in the same house that one spouse brought into the marriage. In that case, the spouse with the house has to share half the value of the house because there were almost no changes in each spouse’s financial situation and so nothing to offset the value in the matrimonial home when the spouses “Net Family Properties” are “equalized.” Watch this video or listen to this podcast, for more on the dangers posed by the law of matrimonial homes. Note that that the special rights for matrimonial homes only apply between two spouses. Those rights regarding matrimonial homes do not apply to third parties, such as in-laws, landlords, business partners, or friends. A spouse has no right under Family Law to stay in a home owned by his or her in-laws or another landlord. You certainly do not become entitled to “half” of a matrimonial home that neither spouse owns. People who think they should have rights with respect to a property that is not owned by them or their spouse should speak to a lawyer to see if any other type of law might help. Before or after a marriage, spouses should never assume that the matrimonial home will just be divided 50/50 until they have each spoken to a lawyer to figure out how Ontario Family Law will work in their family’s situation. This is an area where making a mistake can cost hundreds of thousands of dollars. There may be things a lawyer can do to make things fairer – especially before a separation. But even after separation, there may be possibility of making the tricky legal arguments to adjust how property is divided either pursuant to section5(6) of the Family Law Act or the Principles of Equity. Obviously, there can be a lot of money involved in any marriage or relationship and that means there can be a lot at stake financially. Get the help of a lawyer immediately to avoid financial hardship. You can get a lot more information about Ontario Family Law issues, including property division, support, and most other common family law issues by downloading this $9.99 e-book for Kindle, Kobo, or iPad/iPhone/Mac or ordering the paperback version. But, to keep out of trouble, it is always best to speak with a top family law lawyer. By Fauzan SiddiquiBlog, Family LawAugust 30, 2017July 5, 2023
