When couples separate or get divorced, the division of property can often be a source of animosity and stress. Below is a brief overview of how property is dealt with in a separation or divorce.

Dividing Property

Property division in Ontario is governed by the Family Law Act. Part I of the Act deals with property, except the matrimonial home, which will be discussed below.

Part I of the Act states that the value of any kind of property that was acquired by one of the spouses during the marriage and still exists at the time of separation must be divided equally between spouses. If there is any increase in the value of the property owned by a spouse at the date of marriage, that must also be shared.

When a spouse owns property, and they must share or divide the value with their spouse, they do so by way of equalization payment. This can also be called equalization of net family property. When a married couple separates, it is important to determine what assets and debts each spouse had on the date of marriage and the date of separation. The net amount is called “net family property” (NFP). The spouse who has a greater net family property will be required to pay an equalization payment to the other spouse to make their NFP values equal.

It is important to note that there are exceptions to these rules. There are certain types of property that are excluded and are not shared. This can include gifts or inheritances. And there is an exception to this exception: if gifts or inheritances were used towards the purchase or maintenance of the matrimonial home, they cannot be excluded.

Common-Law Couples

The property division rules under the FLA do not apply to common-law couples. They only apply to couples who are legally married. The property that an individual brings into the relationship, plus any increase or decrease in its value, will usually continue to belong to that spouse. There is no automatic right to divide or share the value of the property upon separation.

However, you may be entitled to a payment from your spouse if you have had a direct or indirect contribution to property that they own. This does not have to be a financial contribution. For example, if you gave up your career and stayed home, and did unpaid work at home so that your spouse could get paid work outside the home, the courts may award compensation.

Common-law spouses can take measures to ensure that their interests are protected. Keeping receipts, registrations, or any other form of proof of ownership is always a good idea. While this seems tedious, it is useful if a disagreement comes up with regards to who owns what.

Calculation of Net Family Property

While determining one’s individual net family property is complicated, and each person’s calculations will involve different pieces of property, a brief overview of what the calculation may look like is useful.

Each spouse should have identified their assets and debts at the time of separation and at the time of marriage.

                               Net Family Property

                         Date of Separation (Value of Property – Any debts)

                                    MINUS

                        Date of Marriage (Value of Property – Any debts)

                        __________________________________________

                                    Net Family Property (NFP)

The Matrimonial Home

The matrimonial home is given special treatment by the FLA. In fact, there is a whole part of the Act that deals with the matrimonial home (Part II).

The first question is: what is the matrimonial home? Section 18(1) of the FLA defines a matrimonial home as follows:

18 (1) 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.

The matrimonial home is often called the family home, and there can be more than one such location. However, for the FLA to apply, the family home must be in the province of Ontario. Any home outside of Ontario will not be given the special treatment by the FLA under section 28(1).

So what is the special treatment that is given to a matrimonial home? When calculating one’s NFP, the value of the property on the date of marriage does not include a home that is the matrimonial home of the date of separation. If the same spouse owns the home at the time of separation, their NFP will include not just the change in value, but the home’s total value, which means this can have a huge effect on which spouse ends up paying equalization payments and how much those payments may be.

Under the equalization process, the matrimonial home’s value is never deducted from a spouse’s net family property as a date of marriage asset, even if that spouse did not own the home at the time of marriage. The home’s value, however, is always included in the valuation date assets of the spouse who owns the home. If the land title is held by both spouses, then the value is divided between the two spouses.

There are also protections given to the matrimonial home. Neither spouse can sell the home, or an interest in the home without doing one of the following: receiving consent from the other spouse to do so; if the spouse has released their rights to the home in a separation agreement; and finally by court order.

Under section 19(1) of the FLA, both spouses have an equal right to possession of the matrimonial home. This is different from the right of ownership.

Dividing of property after separation or divorce can get complicated. The experienced and compassionate team of family lawyers at Borden Family Law is ready to help clients deal with the stressful matter of dividing property between spouses. Our focused area of practice means our clients benefit from our in-depth knowledge of the ins and outs of the family law system, the technical legal rules governing family law matters, and trial strategy. We serve clients in Oshawa, Brooklin, and the surrounding areas. To see how we can help you resolve your issue, call us at 905.576.6090 or contact us below. Ask us about flat fees.