Marriage and property rights can pose knotty problems
(Family INFO series part-1)
Most real estate sales in Canada deal with family homes. Yet it is interesting how misunderstood buyers and sellers are regarding what their rights are when buying or selling a family home.
By understanding your rights, you can make informed decisions about ownership of the home, and who needs to sign documents when the home is sold.
The Family Law Act in Ontario and similar legislation in most provinces recognizes two different kinds of spousal relationships. The first is a married spouse: two people whose marriage is recognized as legal under the laws of the province. The second relationship is a common-law spouse, which refers to two people who are not married but have been living together for more than three years or have been living together less than three years and who are also the natural or adoptive parents of at least one child.
Under the laws of Ontario and in most jurisdictions in Canada, property rights and the concept of the matrimonial home apply only to married spouses and not to common-law spouses. The main principle under the legislation is that when a marriage breaks down, all the property assets that the spouses have accumulated during their married lives are added together. All these assets form a married couple’s “net family property.”
This net family property is then equalized between the two spouses. It makes no difference if a property is registered in the name of only one spouse. As an example, if on separation $400,000 of property is registered in the wife’s name and $200,000 in the husband’s name, the wife pays $100,000 to the husband so that they are equalized.
If you owned a property before marriage, then the value of the property on the day of marriage is excluded from the calculation of net family property. For example, if on the date of the marriage one spouse owned a plaza that was worth $200,000. On the date of separation, the plaza was worth $500,000. Only the gain in value during the marriage – $300,000 – is included in the calculation of net family property.
However, if one spouse owned a house before the marriage, and both spouses moved into the house and reside there as a family, the house becomes the matrimonial home and the entire value is included in net family property. In the above example, $500,000 would be included in net family property if they were still living in the home at the time of separation. Married spouses can have more than one matrimonial home.
Marriage contracts can change your rights to this 50 per cent equalization. Yet even if there is a marriage contract that limits the rights of one of the spouses to the family home, both spouses must still sign any agreement to sell or mortgage the home.
However, if you’re living common law and the home is registered in your partner’s name only, then you have no property rights to the home, and your signature is not required to sell the home. For common-law couples considering buying a home together, in order to protect your rights you must make sure your name is on title to the property. When your name is on title, your legal interest will always be protected and your common-law spouse will need your agreement to sell the home. For married spouses, the sale of your family home will always require both signatures.
WE STRONGLY RECOMMEND FOR RIGHT LEGAL ADVICE IN THIS SUBJECTS.
The more informed you are the better chance you have of making a sound decision. Please contact me and you will have no surprise!
(Family INFO series part-2, see next article on DIVORCE matters…)
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