Division of Property and the Matrimonial Home
Property Division for Married Spouses: Equalization
Married spouses are subject to an equalization scheme when dividing property upon separation or divorce.
Equalization is defined in section 5(1) of the Family Law Act. The spouse whose net family property is the lesser of the two net family properties is entitled to one-half the difference between them.
Conduct (e.g. adultery, abuse) is not considered in the division of assets.
Equalization requires full financial disclosure of spouses to produce documents that establish their incomes, expenses, assets, and liabilities.
The Equalization regime is final. Once the property has been divided, there are no amendments.
A judge may vary the equalization amount in specific circumstances if the court is of the opinion that equalizing net family properties would be unconscionable (5(6) FLA).
Circumstances which may warrant awarding unequal shares include:
(a) Spouse’s failure to disclose debts or other liabilities existing at the date of marriage
(b) Debts or other liabilities claimed in reduction of a spouse’s Net Family Property were incurred recklessly or in bad faith
(c) The part of a spouse’s Net Family Property that consists of gifts made by the other spouse
(d) A spouse’s intentional or reckless depletion of Net Family Property
(e) The fact that the amount a spouse would otherwise receive under subsection (1) (2) or (3) is disproportionately large in relation to a period of cohabitation that is less than 5 years.
- This may include premarital cohabitation (MacNeil v Pope).
- In Futia v Futia, the court gave a greater share of the matrimonial home to an abusive husband because the marriage only lasted for 2 years. The court affirmed that conduct is not to be considered in the division of assets.
(f) A written agreement between the spouses that is not a domestic K
(h) Any other circumstances relating to the acquisition, disposition, preservation, maintenance or improvement of property
The “Matrimonial Home” is defined in section 18 of the Family Law Act as “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 [their] spouse as their family residence”.
- The term “Matrimonial Home” includes real estate, leased premises (apartment or condominium), and personal property (trailer or boat).
- One or both spouses may designate property owned by one or both of them as a marital home in the form prescribed by the regulations. (s.20(1) FLA)
- The Matrimonial property recognizes childcare, household management and financial provisions that are the joint responsibilities of the spouses.
In Da Costa v Da Costa (1992), CarswellOnt 257, a husband successfully excluded Cedar Tree Farm from inheritance because the wife did not ordinarily occupy the Farm as a matrimonial home. The spouses may have intended for it to be a matrimonial home, but she only attended it scarcely.
- A Marital home is given special status because it is usually the most valuable asset that a family owns and because it is the heart of where family life unfolds.
- The Matrimonial home cannot be deducted or excluded, even if only one spouse has a title to the home. Equalization provides that both spouses must share in its value.
- A home can lose its status as a “matrimonial home” and reverts to becoming a pre-martial asset (s.18(1) FLA). For example, if the couple moves out of the home and went into a new home which they now designated as the matrimonial home, the first home reverts back to being a pre-marriage inheritance.
- The equity in a home that has lost its matrimonial status can be deducted in the equalization calculation. (Folga v Folga (1986), 2 R.F.L. (3d) 358 (Ont. H.C.)
- To qualify as a “matrimonial home”, the residence must be in Ontario. Residences outside Ontario, even if ordinarily occupied by a family are treated like any other real estate or asset. No special rights attached to them.
- A couple can have more than 1 marital property, meaning that they can ordinarily occupy more than one matrimonial home at the same time.
- There is no Matrimonial Home for cohabiting spouses, only for those legally married.
- Excluded in the equalization calculation are:
- Any money contributed by one spouse for renovations done to the matrimonial home because funds have been comingled
- Any third-party gifts used to purchase a matrimonial home (Lefevre)
- A Matrimonial home can only be sold or mortgaged with the consent of both spouses or court order, even if only one spouse is the legal owner. Spouses may sign a written agreement where one of them waives their rights regarding a matrimonial home and the other spouse may mortgage or sell it without consent. (s.21(1) FLA)
Domestic Contracts and the Matrimonial Home
Section 52(1) of the Family Law Act states that the default Equalization regime is subject to a domestic contract. This means that if married spouses do not want to divide their property pursuant to an equalization scheme, they can contract out of it. A spouse can make a domestic contract about any matter included in the Family Law Act unless the Act specifically forbids it.
A provision in a marriage contract that limits a spouse’s rights under Part II (Matrimonial Home) is unenforceable. (s.52(2) FLA)
A Note on Possession of the Matrimonial Home
In a marriage contract, spouses cannot contract about possession of the Matrimonial Home. (s.52(2) FLA)
Both spouses have the right to possession of MH regardless of who owns it and has title to the property. The right ends when they cease to be spouses. (s.19(1) FLA
Our Team at Tailor Law offers a free consultation during which you can sit down with a lawyer and figure out which way forward is right for you and your family. To book your Free Consultation, call us anytime at 905-366-0202. Everything becomes more manageable when you have the information you need to plan your next steps. Call Tailor Law today and let us start working on your path forward.