What is a Matrimonial Home?
For many people, the matrimonial home is their largest and most significant asset and is often of great emotional significance.
The Family Law Act defines a “matrimonial home” as any property in which a spouse has an interest that was, at the time of separation, ordinarily occupied as a family residence. The Ontario Courts have held that“ordinarily occupied” does not require constant or continual occupancy. This means that cottages and other recreational property may qualify as a matrimonial home for equalization purposes. This also means that parties can have more than one matrimonial home at the same time.
Please note, this discussion only applies in the context of a marriage not common law relationship (the matrimonial home provisions in the Family Law Act only apply to married spouses).
The Matrimonial Home and Equalization of Net Family Property
In Ontario, the matrimonial home is treated differently than all other assets in calculating the division of property. To calculate how property will be divided we would normally add up all of your assets on the date of separation, subtract any debts you had on the date of separation, subtract any gifts or inheritances that were kept separate and are still in existence on the date of separation and subtract any assets (less debts) you had on the date of marriage to get your net family property (“NFP”). This calculation is done for you and your spouse. Whomever has the higher NFP would then have to make a payment to the other spouse of half the difference between your respective NFPs (this is called an equalization payment). This calculation aims to divide equally between you any property acquired during the course of your marriage or any increase in property that was brought into the marriage. However, the Family Law Act creates an exception for the matrimonial home. Its value is never deducted from a spouse’s NFP as a date of marriage asset, even if the spouse owned the property at the time of marriage, but the home’s value at the date of separation is included. In addition, if you inherited or were gifted money during your marriage and you put those monies into your matrimonial home (e.g. paid for renovations or paid down the mortgage), then it is no longer considered excluded property (in other words, you cannot subtract the gift or inheritance from your NFP). This means that the spouse who owned the matrimonial home at the date of marriage or who put inherited or gifted monies into the matrimonial home will have a higher NFP than they would have if the matrimonial home was not given special treatment. This can have a huge impact on the division of property and, in turn, on that spouse’s financial situation following separation.
There is a loophole to this special treatment. As nonsensical as it may seem, if the original matrimonial home (the home that one of the spouse’s brought into the marriage) is sold at some point during the marriage and a new home is purchased, the spouse who brought the original matrimonial home into the marriage would be allowed to include its value as a date of marriage asset.
If you brought a property into your marriage and you are concerned that it may be considered a matrimonial home, it is important that you speak to an experienced family lawyer who can help you understand how these rules may affect your financially.