From the desk of:

Ross Macdonald

Ross Macdonald

Special Status of the Matrimonial Home in Family Law

In Ontario legally married couples are entitled to require an “Equalization of Net Family Property” upon marriage breakdown. This means, at the risk of oversimplifying, each spouse may be required to calculate the increase in their net worth that occurred during the marriage. The spouse who enjoyed the higher increase in net worth will have to pay half the difference to the other spouse. This is the “equalization” payment.

In calculating increase in net worth the value of most assets owned at the date of marriage are subtracted from the value of assets owned on the date of separation. (Establishing date of marriage values many years after the fact can be problematic. One of the advantages of a Marriage Contract is to set those out at the start.) However, there is a very important exception in the case of a matrimonial home owned on the date of marriage. In calculating the equalization payment, no deduction for the date of marriage value of a matrimonial home is made.

The result is that if only one of the spouses owned a home which became a matrimonial home upon marriage, that spouse’s exposure for an equalization payment will be very substantially increased. He or she will be sharing not just the increase in his or her net worth that occurred during the marriage, but also the full value of the matrimonial home.

Spouses are free to contract out of the entitlement to seek an equalization of Net Family Property or modify the rules of the calculation in any way that they can agree upon. This has to be documented in a formal Marriage Contract.

Even when couples who are about to marry decide to accept most of the provisions of the Family Law Act, R.S.O. 1990, c. F3, for an equalization of net family property, where one spouse alone owns the matrimonial home it is common for them to opt out of the special treatment of the matrimonial home. The rationale for the provision is not clear and it strikes many people as unfair.

A matrimonial home is also given special status in that a non-owner spouse has to consent to it being sold or mortgaged. And the non-owning spouse can register a declaration on title giving notice that the property is a matrimonial home.

This article is not intended to serve as a comprehensive treatment of the topic and is not legal advice. All legal matters are dealt with pursuant to their specific facts and circumstance. Nothing replaces retaining a qualified, competent lawyer.