Married spouses, and in some instances those in common law relationships, have the ability to make a claim against the other party’s property upon the breakdown of a relationship. If upon separation, married spouses are unable to resolve the division of property through negotiation or mediation, real estate law applications can be brought for one half of the family property. The objective in this instance is the division of the value (i.e. an equalization payment), not the property itself. Real estate law recognizes that the spouses were both equal in the relationship and that both parties contributed to the relationship. In Ontario, property which is subject to this division is referred to as Net Family Property.
All property, i.e., household contents, pensions, and vehicles, are included in the division with certain exceptions: gifts provided by a third party to only one spouse, inheritance solely bequeathed to one spouse, and property agreed to be separate in a valid agreement or contract, are excluded from the family property.
The matrimonial home which is the home the spouses cohabitated in during the marriage, is fully shared between the spouses. This is still the case even if it was acquired before the marriage.
There are five triggering events that would give rise to a spouse’s right for an equalization of net family property. These are:
- Granting of a Divorce;
- Declaration of Nullity of Marriage;
- Separation and no reasonable prospect of resumption of cohabitation;
- Death of a Spouse; and
- “Serious Danger” arises; i.e. one spouse “improvidently depleted” their net family property.
If the real estate law does proceed to court, there are many considerations in which the court will take into account to determine the property division.
The court’s primary concern is fairness in the distribution of the property (Hartshorne v. Hartshorne, [2004] S.C.J. No. 20, [2004] 1 S.C.R. 550). Therefore the court must base their decision on certain factors (Family Law Act, R.S.O. 1990, c. F.3, s. 5(6)). These factors include:
- Contribution to the family, household, and children;
- Contribution to a family-owned business;
- Contribution to property (which improved its value);
- Agreements made between the parties;
- Prior court orders;
- Any tax liabilities;
- Conduct that is detriment to the other party;
- Duration of the marriage or cohabitation;
- Acquisition date of the property;
- Any gifts or inheritance granted to the parties;
- The impact the cohabitation had on one parties earning capacity;
- Standard of living the parties enjoyed;
- Mental or physical disabilities experienced by the parties;
- Benefits that were extinguished upon relationship breakdown;
- Contributions to the other parties education;
- Needs of the children;
- Contributions by third parties; and
- Failures to disclose debts at time of marriage.
Every case is decided upon its unique set of circumstances. If you require assistance with your real estate law property issues, we urge you to contact our office to speak with a lawyer.