When couples face the difficult decision to divorce, one of the most contentious and emotionally charged issues is determining who gets the family home. In Canada, who gets the matrimonial home is specific to each province. This article focuses on the status of the matrimonial home in Ontario.
Determining Property Rights and Obligations
The end of a marriage inevitably brings questions about how to divide shared assets. While some couples may reach an amicable agreement through negotiation or mediation, others require court intervention to resolve disputes, especially regarding the family home.
Family Property Concepts
In Canada, matrimonial property laws vary by province and territory. Ontario specifically follows the principle of equalization of assets acquired during the marriage. The matrimonial home, however, receives special treatment under these laws.
The Family Law Act defines the matrimonial home as the property (or properties) that was ordinarily occupied by the spouses as their family residence at the time of separation. This definition applies regardless of whether one or both spouses own the property.
What makes the matrimonial home unique is that both spouses have an equal right to possession of the home upon separation, regardless of whose name is on the title. This means that even if only one spouse legally owns the home, the other spouse cannot be forced to leave without a court order or agreement.
The concept of equal possession rights serves to protect both spouses during the vulnerable period following a separation. It ensures that neither spouse can unilaterally dispose of or encumber the matrimonial home without the other’s consent, providing a layer of security for both parties.
“Buying Out” Your Spouse
One common option for handling the matrimonial home in divorce is for one spouse to buy out the other’s interest in the property. This approach allows for continuity, particularly for children, while providing the departing spouse with their share of the equity.
The buyout process generally involves several steps:
- Obtaining a current valuation: Both parties should agree on the home’s fair market value, either through mutual agreement or by hiring a professional appraiser.
- Calculating the buyout amount: This typically represents half the equity in the home, though adjustments may be made based on contributions to the property or other factors in the overall settlement.
- Securing financing: The spouse retaining the home must usually refinance the mortgage to remove the other spouse’s name and obtain sufficient funds for the buyout.
- Executing legal documents: The property transfer requires formal documentation, including a deed transfer and mortgage refinancing.
The financial feasibility of a buyout depends on several factors, including:
- The current mortgage balance and equity in the home
- The remaining spouse’s income and ability to qualify for a new mortgage
- Current interest rates and lending conditions
- Other financial obligations, including support payments
For many, qualifying for a mortgage on a single income represents the most significant hurdle to completing a buyout. Lenders will assess the retaining spouse’s income, credit score, debt-to-income ratio, and spousal and child support obligations or receipt, which may have changed significantly post-separation.
In some cases, creative solutions may help facilitate a buyout. For example:
- The buyout might be structured as a series of payments over time rather than a lump sum
- The departing spouse might agree to remain on the mortgage temporarily while being removed from the title
- The spouse retaining the home may need the assistance of their extended family in order to facilitate the buyout
- Other assets might be traded to offset part of the home equity
- A delayed buyout might be arranged, giving the remaining spouse time to establish stronger finances
When considering a buyout, consulting with both a family law professional and a mortgage specialist can help determine whether this option is viable given your specific financial circumstances.
Selling The Home
For many divorcing couples, selling the matrimonial home represents the cleanest and most straightforward solution, particularly when neither spouse can afford to maintain the property independently or when both wish to make a fresh start.
The process of selling a matrimonial home during divorce typically involves:
- Reaching agreement on the sale: Both spouses must consent to selling the property, either voluntarily or through court order.
- Selecting a real estate agent: Ideally, both parties should agree on the choice of agent and listing strategy.
- Preparing the home for sale: Decisions must be made about necessary repairs, staging, and who will bear these costs.
- Setting a listing price: Both parties should agree on an appropriate asking price, usually informed by a professional appraisal or comparative market analysis.
- Reviewing and accepting offers: Both spouses typically must approve the final sale price and terms.
- Allocating the proceeds: After paying off the mortgage and other secured debts, closing costs, and real estate commissions, the remaining proceeds are typically divided according to the separation agreement or court order.
When one spouse wishes to sell while the other doesn’t, the situation becomes more complex. In such cases, court intervention may be necessary to resolve the impasse. Courts can issue an order for partition and sale, effectively forcing the sale of the property despite one spouse’s objections.
Factors that might influence a court’s decision to order a sale include:
- Financial necessity (e.g., inability to maintain the property)
- Significant financial inequity in maintaining the status quo
- Evidence that delaying sale would diminish the property’s value
- The best interests of any children involved
Given these complexities, working with experienced professionals who can guide you through the legal, financial, and practical aspects of selling a matrimonial home during divorce is highly recommended.
Role of Marriage Contracts and Separation Agreements
Marriage contracts (prenuptial agreements) and separation agreements can significantly influence what happens to the matrimonial home in divorce cases.
A properly drafted marriage contract can outline how the matrimonial home will be treated upon divorce, potentially overriding some of the special provisions in provincial legislation. For example, in Ontario, a marriage contract could specify that a home owned by one spouse before marriage retains its excluded property status, preventing its full value from being included in the equalization calculation.
However, it’s important to note that courts may scrutinize provisions related to matrimonial homes in marriage contracts more closely than other assets. To be enforceable, such agreements generally require:
- Full financial disclosure by both parties
- Independent legal advice for each spouse
- Absence of duress or undue pressure
- Terms that are not unconscionable or grossly unfair
A marriage contract typically states that it is to be treated as a separation agreement in the event the parties separate.
A separation agreement offers an opportunity to negotiate terms regarding the matrimonial home without court intervention. These agreements typically address:
- Who will retain ownership of the home
- How the value will be divided
- Arrangements for buying out the other spouse’s interest
- Timelines for sale or transfer
- Responsibility for associated costs until disposition
Separation agreements provide flexibility for creative solutions tailored to the family’s circumstances. For instance, couples might agree to a deferred sale, allowing children to remain in the home until a specific milestone (like graduation from high school) before selling.
A well-crafted separation agreement can save substantial legal costs and give both parties greater control over the outcome than leaving decisions to the court. However, like marriage contracts, separation agreements must meet certain legal requirements to be enforceable, including independent legal advice for both parties.
If you’re considering a separation agreement, consulting with a family law professional at Alves Law can help ensure your interests regarding the matrimonial home are properly protected.
Frequently Asked Questions
Can I change the locks on my matrimonial home after separation?
In Ontario, both spouses have an equal right to possession of the matrimonial home, regardless of whose name is on the title. Unless a separation agreement or court order grants exclusive possession to one spouse, changing the locks could potentially violate these rights and lead to legal complications. If safety concerns exist, it’s advisable to seek an exclusive possession order from the court rather than taking unilateral action.
What happens if I leave the matrimonial home? Do I lose my rights to it?
Leaving the matrimonial home does not constitute abandonment of your property rights under Ontario law. Your ownership interest and right to a share of the home’s value remain intact regardless of who continues to live there. However, moving out may have practical implications, such as potentially weakening a later claim for exclusive possession should you wish to return. Before moving out, consulting with a family lawyer is advisable.
Can the court force the sale of our home if we can’t agree?
Yes, courts in Ontario have the authority to order the sale of a matrimonial home through a process known as “partition and sale” when spouses cannot reach an agreement. While courts generally prefer that couples resolve such matters through negotiation or mediation, they will intervene when necessary to prevent financial hardship or to ensure fair property division. The court considers various factors, including financial necessity, children’s needs, and whether alternatives to sale exist.
Does the spouse who contributed more to the mortgage get a larger share of the home?
No. Ontario’s equalization scheme assumes that spouses make certain contributions and sacrifices during their marriage and will rarely look behind the date of separation to “correct” for one spouse’s over- or under-contribution to marital property.
How are vacation properties or second homes treated in divorce?
Secondary properties are generally treated as family assets subject to division, but they don’t necessarily receive the special treatment afforded to the primary matrimonial home. This means that if one spouse owned a vacation property before marriage, its value at the date of marriage might be excluded from division in some provinces. Beware that in Ontario it’s possible to have more than one “matrimonial home”, and we recommend that you obtain legal advice if you’re unsure of how a piece of real estate should be addressed in your situation.
