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.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.