Some Important Information on the Special Nature of the Matrimonial Home
How is a matrimonial home defined?
A matrimonial home has special treatment under Ontario law. Parties should be aware of the many ways in which a matrimonial home is treated differently from other assets, so that they can plan accordingly. Since only married spouses can have a matrimonial home at present, this information is only applicable to those who are, or plan to be, married.
A matrimonial home is defined by 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 the separation ordinarily occupied by the person and his or her spouse as their family residence”. Parties can have more than one matrimonial home, for example, they may have a main city residence as well as a cottage vacation property. As long as these homes fall within the definition of “matrimonial home”, all of the homes can be matrimonial homes such that the legislation applies. There are a number of implications to the existence of a matrimonial home, at date of marriage, over the course of the marriage, and at date of separation.
During the marriage, the spouse legally owning the home is not entitled to sell it or to encumber it without the consent of his or her spouse. Usually, the consenting spouse will have to obtain independent legal advice in relation to the nature and implications of granting the requested consent. Because of these significant restrictions on the owning or leasing spouse of the property having this status, the spouses may elect to jointly designate which property or properties are to be treated as a matrimonial home. The process to be followed to do so involves the registration of a document on title to the matrimonial home. Once a home is designated by this method as a matrimonial home, the other homes which would otherwise be deemed matrimonial homes lose that characterization and they can, therefore, be sold or encumbered without the consent of the other spouse.
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 captured by equalization. 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. Consider the following example:
- Dick and Jane marry in 1990. At the date of marriage, Dick has a bank account with a balance of $300,000 and Jane has a house worth $300,000.
- 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.
- When calculating his net family property, Dick is entitled to deduct the $300,000 bank account value from his date of separation net worth. Jane, conversely, cannot deduct the $300,000 date of marriage value of her house.
The fact that the $300,000 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.
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 is not entitled to require the other spouse to move out before a divorce is granted. Likewise, a spouse cannot unilaterally change the locks to a matrimonial home. This entitlement to equal possession can be varied only by court order or separation agreement (not marriage contract). A court order for exclusive possession of a matrimonial home will only be granted in very limited circumstances. There is no specific test, but there is a high threshold for exclusive possession. Normally some evidence of physical abuse, violence, or a spouse’s actions which adversely affect the best interests of the children living in the matrimonial home is required. Each spouse’s financial position will be considered as well as the availability and affordability of alternate accommodation.