Marriage is an important milestone for many people.  Apart from the glitz and excitement during wedding season, marriage symbolizes a lifelong commitment to share in the love of another person.  Unfortunately, this is a blog post is about real estate law…

It should go without saying that, unsurprisingly, law lacks any understanding of romance.  Instead, property laws in Ontario view marriage as an “economic partnership” and treat certain assets between spouses with special rights and liabilities.  With that in mind, married couples should gain an understanding of some broad legal concepts for owning and selling a ‘matrimonial home’.

This post will discuss the definition of a matrimonial home.  From there, we’ll explore some general concepts that make this type of property unique.

Call It Old-Fashioned But…

Law is unromantic as it is archaic.  While times have changed far beyond traditional marriage conventions, Ontario law still recognizes the ceremony of marriage to be the first key piece in deeming a piece of property as a matrimonial home.  That means that common law partnerships are NOT eligible for the statutory rights conveyed through matrimonial home designations.

As such, this post will focus solely on married couples and will not discuss two individuals in common-law marriages.

 

Types of Ownership: Joint Tenants vs Tenants in Common

Before discussing what constitutes a matrimonial home, a brief overview of the two most common forms of property ownership is necessary.

Generally speaking, when two or more people purchase a property together, they can register their ownership stake as either ‘joint tenants’ or ‘tenants-in-common’.  Below is a quick breakdown of their difference:

Joint Tenants:

  • When one joint owner of the property dies, the surviving owner of the property becomes the sole owner of the property.  The surviving joint owner must provide evidence of the deceased owner’s death and put forward a survivorship application with the government registry in order for this to happen.
  • In most cases, property that is owned jointly will not be included in the deceased owner’s will since it is automatically transferred to the surviving owner.
  • Example:
    • Aaron and Becky are friends from college.  They buy a condo together as joint tenants.  Aaron passes away. Becky is now the sole owner of the condominium.  Aaron’s estate will not have entitlement to the condominium.

Tenants-in-Common:

  • Ownership of a piece of property is divided into specified shares/percentages according to what was agreed upon between the property owners.
  • When one an owner passes away, their estate takes control of the ownership stake for the property.
  • Example
    • Aaron and Becky purchase a condo together as tenants-in-common.  Aaron puts in 70% of the funds for the purchase and Becky puts in 30%.  Their ownership entitlements are 70/30 accordingly. If Becky passes away, Aaron is not the sole owner of the condominium.  Becky’s estate will have a 30% share in the condo and will still be a part of the decision-making process on dealing with the property.

 

What is a Matrimonial Home?

Section 18(1) of the Family Law Act, a matrimonial home is defined as:

“Every property in which a person has an interest and…is ordinarily occupied by the person and his or her spouse as their family residence”.

This definition is wide enough to include not only city homes but also cottages, for example.

While all sorts of properties can be considered matrimonial homes, what is important is that the property must be ordinarily occupied by a married couple and treated as their family residence.  In effect, if a married couple had lived in a downtown condominium for 12 years but later moved to their cottage in Muskoka to live out their retirement, the cottage would be deemed the matrimonial home!

Another tricky issue regarding the designation of a matrimonial home has to do with ownership.  Generally speaking, so long as a spouse has an interest in the property, both spouses do not have to own it to have it considered a matrimonial home!  This occurs when only one spouse owns the property with a third party.

Example:

Aaron and his father, Greg, bought a property together.  Aaron later got married to Becky and moved into the property, treating it as their matrimonial home.  Becky never had an ownership stake in the property.

Different types of ownership stakes make selling the property complex at each juncture.  While the specifics of each transaction can be discussed at length, the most common issue many people encounter is determining how to deal with a matrimonial home when a spouse dies.

 

Till Death Do Us Part

One of the trickiest and oftentimes most stressful scenarios involves the sale of a matrimonial home after a spouse passes away.  Estate, family and property laws in Ontario provide matrimonial homes with specific rights and protections.

In the case where both spouses own a home jointly, the matrimonial home will be transferred to the surviving spouse outright and is not dealt with by the deceased’s will or estate.  However, the scenario becomes complicated when a third party is involved. According to Section 26 of the Family Law Act, if a spouse dies owning an interest in a matrimonial home with a third person who is NOT the other spouse, the joint tenancy is deemed to be automatically converted into a tenancy-in-common.

 

Example 1:

Aaron and Becky are married.  Aaron and his father, Greg, bought a condo jointly.  Aaron and Becky lived in the condo and treated it as their matrimonial home.  Aaron dies. Becky never had an ownership stake in the home.

Since the property is considered a matrimonial home at the time of Aaron’s death, Greg does not become the sole owner, as it would have been if the condo was not a matrimonial home.  Instead, Aaron’s ownership stake is converted into a tenant-in-common and will be dealt with by his estate.

The conversion of a joint tenancy to a tenancy-in-common does not happen if the Aaron, Greg and Becky are all joint tenants of the property at the time of Aaron’s death.  In this case, the normal rules of joint tenancy are preserved.

 

Example 2:

Aaron, Becky and Greg purchased a condo jointly.  Aaron and Becky are married and living in the condo and treat is as their matrimonial home.  Aaron dies. The surviving joint tenants, Greg and Becky, take title as joint tenants and Aaron’s estate will have no entitlement to the home.  

Matrimonial homes also carry the right of possession.  In essence, according to Section 26(2) of the Family Law Act, following the death of a spouse, the surviving non-owning spouse has a right to possession of the home, rent-free, for 60 days after the death.

 

Example 3:

Aaron and his father, Greg, own a condo together as joint owners.  Aaron and his wife, Becky, live in the condo as their matrimonial home.  Aaron dies. Greg is considering selling the condo.

In this scenario, not only does the joint tenancy convert into a tenancy-in-common, Becky will be entitled continue living in the condo, rent-free, for a period of 60 days following Aaron’s death.  Not only will Greg need the cooperation of Aaron’s estate to sell the property, he will also be prohibited from selling the property for 60 days!

 

Preparing for the Future

From the examples above, it’s easy to see how matrimonial homes can become an incredibly complex and sometimes controversial matter.  Regardless of whether you and your partner have just begun planning your future together or if you both have been happily married for many years, it is important to take some time out to chat with a lawyer to understand your current situation to plot out different scenarios in dealing with your property.

Usually real estate lawyers aren’t the only legal professionals involved in discussing the impact of a matrimonial home.  To better widen your understanding, consider consulting with estates and family law practitioners as well as tax & accounting professionals.  By engaging these professionals, you and your spouse are better equipped for the future, for better, for worse, for richer, for poorer, in sickness and in health, until death do you part.

 

Disclaimer: Information made available on this website in any form is for information purposes only. It is not, nor is it intended to replace, legal advice. Contact Chris Chu Law to discuss a specific legal issue and please note that contacting Chris Chu Law, on its own, does not create a lawyer-client relationship.