The requested page was not found

• Library
• Broker Biz
• The Voice
• About Mortgage Brokers
• Residential Mortgage Financing 101
• What is a Credit Report?
• Title Insurance
• Real Estate Fraud
• Family Law Act & Home Ownership
• Industry Links
• Archive
• Glossary of Terms

 

Family Law Act & Home Ownership

Andréa Brinston, LLB

The Ontario Family Law Act [FLA] gives a home that meets the s. 18(1) definition of a ‘matrimonial home’ special status and treatment. It also provides spouses who reside in the matrimonial home with unique rights against one another. Married or soon-to-be married home owners should be aware of the special provisions set out in Part II of the FLA and how they could affect their home ownership.

Section 18(1) of the FLA defines a matrimonial home 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 his or her spouse as their family residence is their matrimonial home.”

In most cases, the matrimonial home is a house that is owned by either one or both spouses and, at the date of separation, is ordinarily occupied by the family. Note that this section only requires that one of the spouses has ‘an interest’ in the property and does not require that interest to be ownership. Therefore, a matrimonial home can also be a property in which one or both spouses have a lease interest or even an interest in such personal property as a trailer or houseboat.

In some situations, there can be more that one property considered a matrimonial home for FLA purposes. For example, a married couple may have both a house and a cottage that qualify as a matrimonial home under this act. However, for the vacation property to be able to meet the requirements under the act, it must be ‘ordinarily occupied’ by the spouses as a family residence for a portion of the year and not just temporarily or occasionally occupied.

Section 19 of the FLA gives both spouses a statutory equal right to possession of the matrimonial home, regardless of whether a spouse has an ownership or proprietary interest in the home. Therefore, even if only one spouse legally owns the home, both spouses have an equal right to live in the matrimonial home. This means that if a marriage breaks down, the spouse who is the legal owner of the home cannot require the other spouse to pack-up and move out, based simply on the fact that the other spouse does not share legal title to the home. The other spouse’s right of possession is a personal right against the spouse who has the interest in the home, and because this right is personal, it ends when they cease to be spouses, by way of divorce or death of their spouse. Note also that the equal right of possession can be varied by a separation agreement or a court order.

In limited circumstances, the equal right to possession can be removed by an order made under s. 24 of the FLA. Regardless of ownership, either of the spouses can make an application to the court for exclusive possession of the matrimonial home. Due to the significant intrusion that this type of order has on one of the spouse’s Part II FLA rights, orders for exclusive possession are not made as a matter of course. For such an order, the court will consider a list of factors, such as the best interests of any children, any existing orders, financial positions of the spouses, any written agreement between the spouses, availability of other affordable accommodations and any violence by a spouse against the other spouse of children. Typically, there will have to be some evidence of violence or physical abuse, or behaviour that is clearly not in the best interests of any children for a court to make such an order.

In addition to an order for exclusive possession, the court can make other orders under s. 24. For example the court may order that the spouse given exclusive possession of the matrimonial home make periodic payments to the other spouse as compensation similar to occupation rent. The court may also order that one of the spouses pay for all or part of the repair and maintenance of the matrimonial home and other liabilities arising with respect of it. Usually the cost of any major repair to the home is shared while the maintenance is usually the responsibility of the spouse that has the right to exclusive possession.

Section 21 of the FLA goes further to restrict a spouse’s ability to dispose of or encumber his or her interest in the matrimonial home unless one of four criteria listed under subsection (1) has been met. A spouse who wants to sell or mortgage the matrimonial home will have to either (a) get the other spouse to join in the instrument or consent to the transaction; (b) get the other spouse to release all rights under Part II of the FLA by way of a separation agreement; (c) get a court order to authorize the transaction or release the matrimonial home from the application of Part II; or (d) the spouse will have to designate another property under s. 20 as the matrimonial home and get the other spouse to also designate the same property. The court can set aside any transaction if none of the above criteria are met unless the other party acquired the interest for value, in good faith and without notice of the situation. Note that the consenting spouse agreeing to the disposal or encumbrance of the matrimonial home should be advised to seek independent legal advice before granting their consent.

It is the restrictions set out in s. 21 that have led to the standard clauses in both mortgage forms and OREA forms used for a purchase and sale agreement that require the mortgagor or seller of the property to indicate that he or she is not a spouse, that the property is not ordinarily occupied as a matrimonial home or that one of the other statements set out in subsection (3) is in fact true.

If the house is legally owned by only one spouse and the other spouse unreasonably withholds his or her consent or cannot be found to give consent, then the court can make an order under s. 23(b) of the FLA to authorize the transaction. If the spouses together legally own the matrimonial home as joint tenants, but one of the spouses wishes to sell his or her interest in the matrimonial home, that spouse can apply for a partition and sale under Rule 20 of the Rules of Civil Procedure and s. 2 of the Partition Act.

The above-mentioned sections of the FLA only apply to spouses that are married and not common law spouse. Part II of the act attempts to create a true financial partnership in marriage and provides for a set of rights similar to those that spouses would have against one another if they were in fact co-owners of the matrimonial home. Married home owners should however be warned that these FLA rights do not apply as against and will not shield them from third party creditor claims against their matrimonial home.