The Matrimonial Home: What Everyone Should Know
No matter what you do for a living, there is a point where you may start to believe that most people know what you know.
I was having a social gathering with childhood friends of mine, and we started discussing Canadian Family Law. Great party topic… All kidding aside, by the time I was finished explaining some of our system’s laws and principles, the room was filled with silence. The silence was finally broken when one of my friends said: “Stéphane, everyone should know this!”. This comment has prompted the birth and purpose of my monthly newsletter.
One of the legal oddities which has taken thousands of Canadian family law litigants by surprise is the legal principle regarding division of “the matrimonial home”. Without getting into complicated legalese, a matrimonial home is the home where two people who are married are living, at the time of their separation. In the event of a separation, the value of the matrimonial home will be equally divided between the parties (Family Law Act, sections 4 and 5). The equal division of the home will take place even if your spouse’s name is not on title, and he/she has made no financial contributions to the property!
For example: Julie invested wisely for many years, and now owns her Orleans town home free and clear – no mortgage. She meets John. They fall in love, John moves into her home and they get married. After six (6) blissful years of marriage, Julie and John grow apart, and separate.
In this fictitious scenario, The Family Law Act provides that John will be entitled to half of the value of Julie’s house, even though he has made no financial contributions to the purchase or upkeep of the property, and is not on title. All other premarital assets owned by Julie will be deducted from the equalization of net family property. However, the matrimonial home is the exception to the general rule.
Many believe this principle to be unfair, but as an Ottawa judge recently stated in one of my proceedings – much to my client’s satisfaction: “This is not bible school, it is court. Although the general objective is to achieve fairness, we must apply the law”.
What is one to do with this information? Domestic Agreement, Domestic Agreement, Domestic Agreement. Before you move in with someone, ensure that a Domestic Agreement is duly signed. The Domestic Agreement, whether it is a cohabitation agreement or marriage agreement, will exclude the matrimonial home from the equalization of net family property in the event of a separation. A small investment in a professionally drafted, iron clad Domestic Agreement, can save you tens of thousands of dollars in equalization of net family property and legal fees.
My next newsletter will discuss the ‘dos’ and ‘donts’ of Domestic Agreements.
I encourage you to share this article with your family, friends and work colleagues. Please feel free to e-mail or call me with any questions you may have. You may also comment on this article by accessing it through my Blog at www.monpremier.ca.