The Common Sense Guide To:
Divorce And The The Matrimonial Home
How Is The Matrimonial Home Split in Ontario?
Financially Smart Divorce Strategies
Lisa and Brian have been married for nine years, but recently, everything has changed. Brian’s attention has started to wane. Lisa is now seeing a different side of him—one she never expected.
As she contemplates divorce, Lisa’s focused on protecting what’s important to her. She’s unsure if Brian has any right to a $50,000 inheritance she received and whether she’s entitled to a share of their home, which Brian owned before they married.
Before making any moves, Lisa needs to understand her rights and plan her next steps very carefully.
20 CRUCIAL "YES and NOs"
About Divorce and The Matrimonial Home
- YES Inheritances are typically exempted as long as the money was kept separate did not go into the matrimonial home.
- NO It doesn’t matter whose name is on title. If you both lived there before the separation, it is considered the matrimonial home.
- YES The matrimonial home is always divided, unless specified differently in a marriage contract.
- NO You cannot change the locks. Typically, both spouses share equal possession of the matrimonial home after separation.
- YES You can seek “exclusive possession” through court orders in cases of domestic violence.
- NO An order for exclusive possession will not affect ownership rights.
- YES An order for exclusive possession is temporary and is intended to give you time to complete your separation agreement.
- YES When you marry and your spouse moves into the home you owned before you were married, it is instantly considered the matrimonial home.
- NO You don’t get credit for the value of the matrimonial home from before your marriage. The matrimonial home is given special treatment in Ontario and the pre-marriage property value is not subtracted from the matrimonial home’s worth during divorce proceedings
- YES You are still responsible for the mortgage if your name is on it, even if you’re not living there.
- YES Inheritance is typically exempt UNLESS you put the money into the matrimonial home.
- NO Your ex-spouse will NOT be paying your mortgage or rent. Post-divorce you may receive support and you will pay your own mortgage or rent.
- NO Your spouse may not be legally required to repay a gifted down payment, though you can still try to negotiate it with your spouse.
- YES Unless you have a legal Separation Agreement, you will pay land transfer tax if you buy out your spouse’s share of the matrimonial home.
- YES Cottages or additional properties might also be considered matrimonial homes.
- NO If you are Common Law you do not automatically have the same rights with regards to a matrimonial home. In Common Law, whoever’s name is on the title owns the home.
- NO You are not allowed to mortgage, refinance or place a line of credit on the matrimonial home without your spouse’s written consent.
- YES A gifted or inherited property could still be subject to division if both spouses lived there.
- YES If you can’t agree on what to do with the matrimonial home, you may apply to the courts for an order of partition and sale requiring the house to be sold.
- NO There is no right of first refusal within Ontario family law. If the house is ordered sold, the party wishing to stay in it must bid on the open market with all other buyers.
NEXT STEPS: Better Understand Your Rights To The Matrimonial Home
- Contact your Bank to find out exactly what the outstanding Mortgage Balances are on your home.
- Find out if there is a Home Equity Line of Credit (HELOC) or Second Mortgage also secured against your home.
- Find out in who’s name the Mortgage is registered.
- Confirm who is listed as the registered owners of your home. (You may search the public records at your City/Town Hall or online with according to Ontario Land Properties Records)
- Search local MLS Real Estate listings to get a sense of what your property could sell for.
- Understand the Divorce Process in Ontario to better understand your specific situation by creating a free Ontario Divorce Plan.
Gail Vaz-Oxlade: What You Need to Be Thinking about Regarding The Matrimonial Home
What Stage of Separation are you at?
I'm researching Separation
My Separation is imminent
I'm beginning a Divorce
With 25+ years of no-nonsense financial advice on TV, radio, and as a best-selling author, Gail Vaz-Oxlade brings her financial common sense to divorce.
Keeping the home isn’t just an emotional decision; it’s a financial one. If you can’t afford the house after divorce, you’re not doing yourself any favors by holding onto it. Let go of the emotional attachment and focus on what makes financial sense.
BUT if you can afford to carry your home, The Common Sense Divorce, unlike lawyer lead litigation or dragging things through the courts, lets you and your spouse sit down and work out a creative agreement that makes sense for both of you – like a buyout plan or co-ownership until the kids are older.
Table of Contents
“If you are hoping to keep your home after a divorce, The Common Sense Divorce offers smart solutions.
Unlike lawyer lead litigation or dragging things through the courts, our divorce solution lets you and your spouse sit down and work out a creative agreement that makes sense for both of you – like a buyout plan or co-ownership until the kids are older.
The Common Sense Divorce focuses on what really matters—keeping your family’s stability intact.”
Who Owns The Matrimonial Home in Ontario?
In Ontario, the home you live in at the time of separation is known as the “matrimonial home.” Its value is divided between you and your spouse when you separate or divorce.
Joint Ownership of the Matrimonial Home
If you are legally married, no matter whose name is on the title or mortgage, the matrimonial home is considered jointly owned by both spouses. Even if one spouse owned the home before the marriage, if you both lived there on your wedding day, it automatically becomes the matrimonial home, shared equally by both of you.
Common Law and The Matrimonial Home
In Ontario, Common Law partnerships are not legally considered to be marriages, no matter how long you’ve lived together. Because of this, the rules around the matrimonial home don’t necessarily apply to common-law couples.
Selling The Ownership of The Matrimonial Home
Transferring Title From One Spouse To The Other
As part of your separation negotiations, you may agree together that one party will take over the ownership of the matrimonial home. In essence this means that one party is selling their share of the matrimonial home to the other spouse.
This means that the selling spouse will need to be removed not only from title but also from any mortgages secured against the house.
This may require the buying spouse to qualify for a new mortgage in their name only. This new mortgage will have to cover both the existing mortgage and the amount needed to buy out your spouse’s share of the home’s equity.
Once you have agreed on all of the financial and legal terms, and once your Separation Agreement has been signed and formalized, a real estate lawyer will be engaged to formally transfer the home’s ownership from one spouse to the other, according to the terms of your Separation Agreement.
In Ontario the matrimonial home is defined as “every property in which a person has an interest … 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.”
“If you intend to buy out your spouse’s share of the matrimonial home, you will have to pay land transfer tax on your spouse share, unless you have a formal separation agreement in place.”
Matrimonial Home Exemptions: Does the Home Always Get Divided 50/50?
In Ontario, the matrimonial home holds special status under the Family Law Act. Unlike other assets, the matrimonial home is generally divided equally between spouses upon divorce, regardless of whose name is on the title or when it was purchased.
This means that even if one spouse owned the home before the marriage, its full value at the time of separation is usually shared equally between both parties.
However, while most property accumulated during a marriage is subject to equalization (with exemptions for pre-marriage property, gifts, or inheritances), there are few exemptions for the matrimonial home itself.
The entire value of the matrimonial home is typically included in the division of assets, even if one spouse owned it before the marriage. Here’s a clearer breakdown:
Pre-Marriage Exemptions: When a home was owned before we were married
If one spouse owned the matrimonial home before the marriage, typically the value of the home at the time of the marriage is not exempt from division. Normally the entire value of the matrimonial home at the time of separation is divided equally, regardless of who originally purchased it or when.
For example:
- If a spouse owned the home before marriage, even if it was worth $500,000 at that time, the full value of the home at the time of separation (say $800,000) is shared equally between both spouses. There is no credit for the $500,000 pre-marriage value.
Inheritance Exemptions or Gift Exemptions on The Matrimonial Home
Even if one spouse inherited the matrimonial home or received it as a gift, typically once the home becomes the matrimonial home—the home where the spouses lived together—it loses its exempt status.
Unlike other gifts or inheritances, which may be exempt if kept separate from family property, the matrimonial home’s entire value is subject to division.
Exemption By Mutual Agreement
Sometimes, spouses can together exempt part or even all of the matrimonial home from equal division according to your own, jointly agreed upon terms.
This is often done before marriage with a prenuptial agreement/marriage contract, or at the time of separation as part of their Separation Agreement, where you both decide how to divide assets, including the home.
Divorce Exemptions on Other Properties
While the matrimonial home doesn’t benefit from exemptions, other properties (such as a second home, rental properties, or investments) may be treated differently.
If these other properties were owned by one spouse before the marriage or received as an inheritance, they may be partially exempt from division, provided the funds remain traceable and the property wasn’t used as the matrimonial home.
If one spouse owned other real estate (not the matrimonial home) before the marriage, they may be able to claim an exemption for the property’s value as of the date of the marriage. This means that if you brought the real estate into the marriage, the increase in its value during the marriage is typically subject to division, but the value it had before the marriage may be excluded.
For example:
- If you bought an investment property worth $300,000 before the marriage and it’s worth $500,000 at separation, the $200,000 increase would be divided between both spouses. However, the initial $300,000 may be exempt from division.
Important Note on Divorce and Real Estate Exemptions
Even though these exemptions exist, claiming them isn’t always easy. If there is a potential exemption claim, you may have to work through complex legal negotiations or court in order to enforce that claim.
You will need to provide clear evidence—such as real estate appraisals or financial records—to prove claims or values at the time of marriage, the source of funds used to buy the home, or the intention of gifts.
Without solid proof, the court is likely to treat the entire value of the matrimonial home as a shared asset.
Do I Buy Out My Spouse or Do We Sell?
Let’s face it, homes aren’t just bricks and mortar. They’re where we’ve built memories, shared laughs, and maybe shed a few tears. So, it’s no wonder that many people are emotionally tied to their homes and hesitant to let go. We often want to keep things stable for the kids or stay in the neighborhood we know and love.
But when it comes down to it, the decision to buy out your spouse or sell the matrimonial home is all about the numbers. Can you afford to keep the house on your own? Here are some things you need to think about before making that call.
- Your home is full of memories—some good, some not so great. Are these the memories you want to carry with you into your new life? There’s something to be said for starting fresh in a new space, where you can create new memories without the baggage of the past.
- Don’t underestimate how resilient kids can be. Many families find that the excitement of a new home can actually help children adjust and even look forward to the changes.
- Can you handle the upkeep on your own? Owning a home isn’t just about paying the mortgage; it’s about mowing the lawn, shoveling the driveway, and fixing the roof. Remember, your ex might promise to help, but you’ll need to be prepared to handle these tasks solo.
- Finally, don’t let yourself become “house poor.” Taking on a financial burden that’s too heavy can add unnecessary stress and slow down your financial recovery. Make sure you’re setting yourself up for success, not just survival.
Can I Use My RRSPs To Buy A New Home When I Divorce?
In Jan 2020, the Canadian federal tax law was changed to assist divorcing individuals.
The Canadian Home Buyer’s Plan, the same plan that allowed first time homebuyers to withdraw from RRSPs to purchase their first home, now allows separating spouses to withdraw from their RRSPs without facing tax penalties, as long as the withdrawn amount is used for the acquisition of a new home.
How Do I "Buy Out" My Spouse?
“Buying out” your spouse means you’re purchasing their share of the matrimonial home. To do this, you’ll need to be ready to take on the existing mortgage and also pay your spouse their share of the home’s equity.
For most people, this involves assuming the current mortgage and refinancing the mortgage to include the amount you owe your spouse.
Let’s break it down:
If your house is worth $800,000 and you have a mortgage of $300,000, the remaining equity is $500,000. Your spouse is entitled to half of that equity, which would be $250,000.
So, if you decide to keep the matrimonial home, you’ll assume the existing $300,000 mortgage and then increase it by $250,000 to buy out your spouse. This means you’ll be taking on a new mortgage of $550,000.
The Unofficial Rules of Divorce:
Divorce gets prickly, even in the most amicable situation
It’s often less about the legalities and more about the money
People make expensive mistakes because they don’t make a plan
Before you do anything, understand your rights, obligations & complexities
Occupational Rights: Who Gets to Stay in the Home During The Divorce?
When a couple separates, one of the most pressing concerns is often, “Who gets to stay in the matrimonial home?” Under Ontario’s Family Law Act, both spouses have an equal right to remain in the matrimonial home, regardless of whose name is on the title or mortgage.
This legal right remains in place until a court order, separation agreement, or sale of the home changes it. However, determining which spouse stays in the home during the divorce process, and potentially after, is a more complex matter.
Temporary Possession of the Matrimonial Home
If necessary, the Courts in Ontario have the authority to grant one spouse exclusive possession of the matrimonial home, meaning that one party may be ordered to leave while the other stays.
It’s important to note that exclusive possession is a temporary solution and doesn’t affect the final division of property. So, even if one spouse is granted temporary possession, it doesn’t mean they get the home permanently when the assets are divided.
The Real Deal About Going to Court
Let’s get one thing straight: Going to court over who gets to stay in the house during a divorce is not the simple fix people think it is. It’s expensive, it’s slow, and it doesn’t guarantee you’ll get what you want.
If you do decide to take it to court, you could be in for a long, drawn-out process. Courts can grant exclusive possession to one spouse, meaning that one of you will be ordered to leave the home while the other stays.
But here’s the kicker: it’s a temporary solution. Even if you get to stay in the house, it doesn’t mean you’ll end up with the house when the dust settles. Plus, courts don’t make these decisions lightly—they’re looking at a ton of factors, like:
- The kids: The court’s going to make sure the kids aren’t uprooted, so if one parent has primary custody, they’ll probably get to stay in the house.
- Money: Can you afford to find a place to live? Can your ex? If one of you is in a tighter financial spot, that’s going to play into the decision.
- Bad behavior: If there’s been any violence or threats, the court will step in to protect the vulnerable spouse.
- Other housing options: If one of you can easily find another place to live, the court might tell you to move out.
Court Should Be the Last Resort
Going through the court system is not only time-consuming, but you also lose control of the outcome, which can leave you feeling worse off than when you started. At the end of the day, going to court should be the last resort. It’s expensive, it’s slow, and incredibly invasive.
10 Divorce and Matrimonial Home Questions to Ask Yourself
- Do I or my spouse want to keep the home?
- Do I really want to stay in a home that comes with memories?
- What is the value of my home?
- What time of year is the best for selling this home?
- Can I qualify for a mortgage?
- Can I afford to pay that mortgage?
- Am I keeping the home for the wrong reasons?
- Can I afford to buy another house near to my children?
- Am I able to do upkeep and maintenance on this home?
- Where would I want to live if I didn’t live here?
How Do I Value The Matrimonial Home?
There are a few main ways to determine the value of the matrimonial home during a separation:
The Value Realized By the Sale of the Matrimonial Home to a Third Party
If you and your spouse decide to sell the home to a third party, the value is set by whatever the market will bear—the sale price. Make sure you finalize your Separation Agreement before the sale, because the proceeds will be held in trust by your real estate lawyer until everything is settled.
Appraising The Value of the Home for A Buyout Between Spouses:
If one of you is buying the home from the other, the value is determined by a formal appraisal. This appraisal should be done by a certified Home Appraiser.
When it comes to refinancing, keep in mind that banks usually have a list of approved Home Appraisers. To avoid paying twice for an appraisal, it’s a good idea to use the appraiser recommended by the bank you’re getting the mortgage from.
Can a Realtor Value Our Home For Divorce?
If both you and your spouse are in agreement, you can assign any value to your home. Some couples simply agree on a price together, while others consult a realtor. Realtors have access to recent sales data in your neighborhood.
However, it’s important to recognize that a realtor’s assessment is an expert opinion and doesn’t serve as a formal appraisal for purposes like re-mortgaging.
Will I Be Able To Keep My Home After Divorce?
Avoid costly mistakes—know your rights and responsibilities in Ontario. Move forward with a solid plan! Answer a few quick questions and instantly receive your FREE Ontario Divorce Plan specific to your situation. Start now and take control of your future!
Mortgages And The Matrimonial Home
What Happens With Existing Mortgages on The Matrimonial Home?
Just because you’ve got a Separation Agreement doesn’t mean you’re off the hook for mortgage payments. If both your names are still on the mortgage, the bank holds both of you equally responsible for every payment until one person’s name is legally removed from the mortgage.
New Mortgages
Canadian banks won’t approve you for a new mortgage without a copy of your legal Separation Agreement. When you apply, the bank will look at your credit, income, and debts alone. They’ll also factor in any support payments as part of your financial picture during the mortgage assessment process.
How Do I Qualify For A Mortgage After a Divorce?
In today’s market, getting a mortgage can be challenging, especially after a divorce. The best move is to connect with a specialized divorce mortgage broker who has access to all the banks in Canada.
To qualify for a mortgage in Canada, you’ll need to meet specific requirements set by lenders. While the exact criteria can vary from one lender to another, here are the key factors that usually determine your eligibility:
Separation Agreement: Your Bank or lender will require a finalized and legal Separation Agreement, signed by both you and your spouse. This document must clearly outline any child and spousal support obligations.
Good Credit Score: A strong credit score is essential. Most lenders will look for a score of at least 680 or higher.
Steady Income: You need a consistent, verifiable source of income that shows you can handle mortgage payments.
Employment History: Lenders typically prefer at least two years of steady employment in the same field.
Debt-to-Income Ratio (DTI): Lenders will check your DTI, which compares your monthly debt payments to your gross monthly income. A lower DTI, usually below 43-50%, is preferred.
Property Appraisal: The property you’re looking to buy needs to be appraised to ensure its value matches the mortgage amount.
Mortgage Stress Test: This test checks if you can handle mortgage payments if interest rates rise. You’ll need to qualify at a higher rate than the one you’re applying for.
These are general guidelines, and each lender might have slightly different requirements. Working with a mortgage broker or lending professional can help you understand what’s needed for your specific situation and guide you through the mortgage application process in Ontario, Canada.
Divorce is often less about legalities and more about money. Similarly, divorce and the status of the matrimonial home are strongly intertwined with complex mortgage responsibilities and tax obligations that will need to be addressed.
Should I Refinance a Mortgage During a Separation?
When you’re on the brink of separation or have recently separated, and your mortgage term is coming to an end, it’s crucial to tread carefully. One major mistake to avoid is renewing your mortgage if separation is on the horizon.
This can lead to substantial and costly penalties when it comes time for one party to buy out the matrimonial home or if the home needs to be sold. Here’s what you need to consider:
Avoid Mortgage Renewal: Renewing a fixed mortgage before separation can result in hefty penalties, especially when it comes to dividing the matrimonial home.
Using Your Mortgage for Debt Consolidation: Refinancing your mortgage to consolidate debt before divorce might not be the best move. Rolling unsecured debts into a secured mortgage can complicate your ability to manage those debts individually later on.
Address Debts in Your Separation Agreement: When you separate, your debts should be clearly addressed in your Separation Agreement. If separation is imminent, it’s best to keep debts out of the mortgage and deal with them according to your agreement.
Contact Your Bank: If your mortgage matures during a separation, get in touch with your bank right away to inform them of the situation.
Bank’s Assistance: Many banks are willing to help by extending your current mortgage for a few months or placing you in a temporary mortgage to give you time to sort out your divorce matters. While the interest rate might be slightly higher, this approach is far more cost-effective than incurring potential mortgage penalties.
By communicating openly with your bank and carefully considering the implications of mortgage renewal, you can navigate this critical financial aspect more effectively during a separation.
How to Avoid A Messy Divorce
Seriously consider mediation before lawyer litigation
If at all possible, stay out of the Family Courts
Gather and organize your financial documents
Do your homework, understand how divorce works in Ontario
A Smarter Approach: The Common Sense Divorce
There’s a much better way to handle this—and it doesn’t involve dragging your issues into court.
The Common Sense Divorce provides a process that helps you and your spouse sit down, talk it out, and figure out who stays in the home without needing to hire expensive lawyers or waste months in court. Our financially savvy and solution focused mediation services put the power back in your hands, helping you make the decisions that are best for your family, your finances, and your future.
Through The Common Sense Divorce, you’ll work with professionals who specialize in family law, real estate, mortgages and financial planning, giving you the tools to make smart decisions.
We help you come to a mutual agreement that works for both parties. Looking for solutions that don’t involve selling the house? We’ll explore all the options, including buyouts and refinancing, so you can avoid unnecessary financial headaches.
Its really important that you avoid costly mistakes—and know your rights and responsibilities in Ontario. If you are hoping to be smart with the family home, its wise to move forward with a solid plan! Answer a few quick questions and instantly receive your FREE Ontario Divorce Plan specific to your situation. Start now—take control of your future!