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The special nature of the matrimonial home

By Jennifer Samara Shuber

Your home. It is likely your most valuable and valued asset. But were you aware that your home may qualify for special treatment under Ontario law?

A matrimonial home is defined by the Family Law Act as every property in which a person has an interest which is or was, at separation, “ordinarily occupied” by married spouses as their “family residence.” Spouses can have more than one matrimonial home. For example, they may have a city residence and a cottage property.

Only married spouses can have a matrimonial home, so these provisions do not apply to common law or cohabiting spouses. The following are implications of matrimonial home status, at date of marriage, over the course of the marriage, and at date of separation.

During the marriage, the spouse legally owning the home cannot sell or encumber it without the consent of the other spouse. Usually, the other spouse will have to obtain independent legal advice on the implications of consent. Because of these restrictions on a property having matrimonial home status, spouses may elect to jointly designate which property or properties are to be treated as matrimonial home(s). Once a home is designated a matrimonial home by registration of a document on title, other homes which would otherwise be deemed matrimonial homes lose that characterization. They can, therefore, be sold or encumbered without the consent of the other spouse.

Both spouses have an equal right to possession to the matrimonial home(s), regardless of ownership. That is, one spouse may legally own the home, but both married spouses are equally entitled to live in it. If the marriage breaks down, the owner spouse cannot require the other spouse to move out of the matrimonial home before a divorce is granted, nor can the owner spouse unilaterally change the locks. The entitlement to equal possession can be varied only by court order (in very limited circumstances) or separation agreement (not marriage contract).

Married spouses equalize their property upon separation. To do so, each spouse must calculate his or her net family property, which, simply put, is net worth at the date of separation less net worth at the date of marriage. This deduction of marriage date assets ensures that only wealth accumulated during the marriage is equalized. An important exception to this scheme is a home. If a spouse owns a home at the date of marriage which becomes the matrimonial home, and which remains the matrimonial home at the date of separation, the spouse cannot deduct the home’s value at marriage date from net family property. For example:

  • Dick and Jane marry in 1990. Dick has a bank account with a balance of $500,000 and Jane has a house worth $500,000.
  • Dick and Jane live in Jane’s house, which becomes the matrimonial home.
  • When they separate in 2000, they are still living in that same home.
  • Dick can deduct the $500,000 date of marriage bank account value from his date of separation net worth but Jane cannot deduct the $500,000 date of marriage value of her house.

The fact that the $500,000 value is in the form of a matrimonial home rather than a bank account makes a significant difference in the calculation of each party’s net family property and, hence, in the ultimate equalization payment. To avoid this wrinkle, which if often considered unfair, many parties opt to enter into a marriage contract that specifically allows the deduction of the value of the matrimonial home for equalization purposes, thereby levelling the playing field.

I would be happy to consult with you to discuss the home in greater detail.

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