BY: VALERIE DYE
Under the Family Law Act (the Act), where one party owns a home prior to marriage and the home becomes the matrimonial home that home is included in calculations for the purpose of property division (i.e. equalization). Thus, while other assets owned by the spouse prior to marriage are not included in the equalization process, a matrimonial home is not treated in the same way.
This is a general rule and the Courts have recognized that it can often lead to unconscionable results especially where a marriage lasts for only a short period of time. Consider the situation where Party A owned a home prior to his or her marriage to Party B. One year after the marriage the parties separate. Based on the Act the home is included in the calculations to determine how much each party is entitled to upon the division of assets. If Party A`s net family property (including the home) is valued at $800,000 and Party B`s net family property is $100,000, then Party A will pay Party B the sum of $350,000. Essentially Party B will get a share of the home which was owned by Party A prior to marriage.
In Stergiopoulos v. Von Biehler (2014 ONSC 6391) the husband owned the matrimonial home prior to marriage. The marriage only lasted 20 months. The court referred to section 5(6) of the Act which states that:
The court may award a spouse an amount that is more or less than half the difference between the net family properties if the court is of the opinion that equalizing the net family properties would be unconscionable, having regard to, (e) the fact that the amount a spouse would otherwise receive is disproportionately large in relation to a period of cohabitation that is less than five years.
The court concluded that 20 months was one-third of the five-year period and therefore the wife should be awarded only one-third of the value of the home.
In Burden v. Burden, 2014] O.J. No. 5192 (S.C.J.) the husband owned the matrimonial property before the marriage and the marriage lasted only 17.5 months. Taking into consideration the requirement for a five-year marriage duration in accordance with section 5(6) of the Act, the court proportionately reduced the amount of equalization payment the wife was entitled to.
Where a marriage has lasted close to five years the court may be less inclined to reduce the amount of payment to which the non-owning spouse is entitled. In Rinaldi v. Branch, 2016 ONSC 38, the parties separated one month short of five years. The wife had owned the house prior to marriage and sought to invoke the provisions of section 5 (6) of the Act to prevent the husband from obtaining a share of the matrimonial home. The court considered the fact that the marriage lasted almost five years and, although the wife owned the home prior to marriage the husband was still able to benefit from an equalization payment which took into consideration the value of the home.
The conclusion is that even if you own your home prior to marriage your spouse may be able to benefit from a share of that home unless your marriage lasted for a period that is significantly less than five years.
The only way to prevent one party from benefitting unfairly from assets owned by the other party prior to the marriage is to have a marriage contract.