An Ontario court recently examined a dispute over a matrimonial home between a separated couple who had purchased the home as joint tenants prior to their marriage. The court found that the husband in question was not entitled to any “notional credit” for the difference in down payments between the parties (the wife had paid less), and that as joint tenants, the parties had always held the home in joint tenancy and were entitled to an equal share of the assets. A sale of the matrimonial home was ultimately ordered.
The parties began to live together in 1999 at which point they bought a house together and held title as joint tenants. They married six years after the home purchase, but ultimately separated in 2012. Throughout their relationship they lived in this home (their matrimonial home) and owned it jointly.
Following the separation, the wife moved out. While the parties had initially discussed the husband buying out the wife for her share of the home, they could not ultimately agree on an amount. The husband continued to live in the home, paying all the carrying costs (mortgage, taxes, and insurance) in the amount of about $2,000 per month. He also paid for some renovations and repairs.
At the date of separation in 2012, the home was valued at $310,000. An appraisal in May 2016 valued it at $525,000. The home was the most significant asset of each party.
The wife eventually filed a motion for an order that the home be sold prior to the trial to resolve all other outstanding matters between the parties. The husband brought his own motion for an order that the home not be sold before that trial, and for the value of the home as of the date of separation ($310,000) be used in the equalization payment calculations.
Joint Tenants and Family Law
Legally, a person who owns property as a joint tenant with another person has a prima facie right to the partition (i.e. division) and sale of the property. In family law disputes, a court can order the sale of a matrimonial home unless the party who resists the sale (in this case, the husband) can establish a prima facie case that they are entitled to a competing interest in the home under the Family Law Act.
Where that party cannot establish this competing interest, the home can be ordered sold. Where that party can demonstrate this competing interest, the motion to order a sale will be dismissed unless the person bringing the motion (in this case, the wife) can demonstrate that the sale would not prejudice the person’s rights.
Issues for the Court to Determine
Based on the above, the Court had to decide whether:
- The husband had established that he was entitled to a competing interest so that the sale of the home should not proceed;
- The wife had demonstrated that a sale of the home would not prejudice the husband’s rights;
- The wife’s conduct has been malicious or oppressive.
Was the Husband Entitled to a Competing Interest?
The husband argued that the wife’s equalization payment that was still owing to him would be as much, or more than, the value of her half of the matrimonial home. As such, he was entitled to an order transferring the home entirely to him.
He also argued that he had paid the wife’s share of the carrying costs of the home and had spent additional money undertaking needed repairs. Further, he noted that when the parties bought the home prior to marriage they had made unequal contributions to the down payment (he paid close to $50,000 whereas she paid around $20,000) and he wanted a “credit” for the difference.
The husband argued that he should not pay occupation rent to the wife since he had been paying all the carrying expenses with respect to the property. Based on all of this, he believed he established his competing interest and that the order for sale should not be made.
The court noted:
There is no authority for the husband’s position that he should be entitled to a notional credit for the difference in down payment that he made on the home prior to the parties’ marriage. From the date of purchase, the parties have always held the home in joint tenancy. Joint ownership results in each party’s entitlement to an equal share of the asset.
The court further noted that where a claim is made by an occupying spouse (here, the husband) for carrying costs, that spouse must submit to an allowance for occupation rent.
The court noted that it was not satisfied that the husband had shown that the wife would owe him an equalization payment equal to or greater than her interest in the matrimonial home.
Did the wife show that a sale would not prejudice the husband’s rights?
The husband argued that refinancing the existing mortgage would be easier than obtaining a new mortgage on another property as he would likely not qualify for the amount that he would need if he were going to buy another property using his share of equity in the matrimonial home. If the matrimonial home were sold, he would not have another home of his own and would have to rent one.
With respect to this, the court noted that the husband had no right to own the home after separation and divorce. As a joint tenant he simply had a right to half of its value. He might have a right to an equalization payment depending on the final net family property calculations of both parties.
In addition, there was no evidence that the husband would be able to assume the existing mortgage on the matrimonial home, nor was there evidence that it would be easier to do this instead of applying for a new mortgage for another house.
The court found that a sale of the home would not prejudice the husband’s rights.
Was the wife’s conduct in bringing this motion malicious or oppressive?
The husband argued that the wife’s conduct in bringing her motion was both malicious and oppressive since he would have nowhere to go if the matrimonial home were sold. Again, he argued that he would not be able to qualify for a mortgage on a new home, but repeated that he did have enough money to buy out the wife’s share of the matrimonial home.
He further argued that if the home was sold he would not have any assets to pass onto his children (from a previous marriage), and that the wife’s desire to force the sale was oppressive because he wanted to keep the house and the sale would prevent him from doing so.
The court noted that the trial to resolve all other outstanding matters between the parties would not be held anytime soon, and that so long as the wife continued to be liable on the mortgage for the matrimonial home, she would be unable to obtain a mortgage on another property. There was nothing malicious or oppressive about her actions.
In addition, the court stated that:
…the sale of the matrimonial home can often the most appropriate a catalyst to effect the equal division of the family assets… One of the main issues between these parties is the value of the matrimonial home. A sale of the home on the open market would crystallize its value. If the parties cannot not resolve the issues regarding credits and occupation rent, among other things, the trial will be shorter and more focused.
Since the court found that the husband had no competing interest in the home, that a sale of the home would not prejudice his rights, and that the wife’s conduct in bringing the motion for the sale was neither malicious nor oppressive, the court ultimately ordered that the matrimonial home be sold at a price recommended by a realtor or realtors. The parties were ordered to cooperate fully and sign all necessary paperwork.
To speak with an experienced Windsor lawyer about complex property division, including equalization and questions surrounding the matrimonial home, call Jason P. Howie at 519.973.1500 or contact us online. Many of our clients are referred to us by former and current clients, as well as by lawyers, accountants and other professionals.