Few life events are more stressful or heart-wrenching than going through a separation. Amid the emotional turmoil, you still have to figure out what to do with the house that you and your former partner shared.

The legal aspects of the division of assets during divorce are one of your most significant challenges. A separation can be messy and confusing even when both partners are relatively amicable. (Disclaimer: Please take this article as general information and not for legal advice. It’s important to seek out an experienced lawyer if you are considering a divorce.)

Once your separation is behind you, the path forward becomes clearer. The trick is in getting there. In this post, we’ll provide some general answers to your questions regarding real estate and divorce.

If change is in the air, an accurate, unbiased assessment of your home’s value is critical. Book your complimentary home evaluation here.

How Are Assets Divided in a Divorce in Ontario?

The division of assets in divorce is governed by the Ontario Family Act to ensure an equitable division of wealth. It is a bit simplistic to say that everything gets divided 50/50. The truth is more complex, which is why the technical term is that we “equalize” assets between partners.

Some assets, such as the matrimonial home, might be split straight down the middle, others will be calculated based on the length of the union, any marriage contracts that are in place and the calculation of the growth in each partner’s net worth from the date of the union to the separation.

First, you and your partner, or better yet, your individual lawyers, will calculate the Net Family Property (NFP). Essentially, this is the value of all assets minus any debts that you own together as a family. Some property that either of you owned before the marriage will be excluded from this value.

A fast and seamless sale is often a high priority during a divorce or separation. The posts below can help:

• How to Sell Your Home After a Divorce
• 8 Important Things to Remember When Selling Your Home
• How to Sell Your House Fast

What Is a Matrimonial Home?

Matrimonial home rights in Ontario are in a separate category from all others. For the most part, property owned by one partner before the marriage is excluded from the Net Family Property. The matrimonial home shared by both partners is always included no matter how long one partner owned it first.

For example, imagine you get married later in life after living in a house you’ve owned for many years. The mortgage could even be entirely paid off. If you now get married and your spouse moves in, the property becomes the matrimonial home, and its entire value is now included in the NFP. If you divorce, your former spouse is entitled to their share of the proceeds when selling the home.

What if the house isn’t yet paid off? Let’s say you bought property five years ago for $500,000 and still have $400,000 remaining on your mortgage. If you divorce and sell the home, you have an NFP of $100,000. Your former spouse is now entitled to half of the gain in value, which works out to $50,000.

The fact that real estate appreciates in value complicates matters even more. Let’s think back to the previous example where you bought a house for $500,000. The difference now is that the house has grown in value to $550,000.

Upon selling, subtract the $400,000 mortgage from the total price. This leaves you with $150,000 in cash after paying off the loan. Once again, your spouse is entitled to half of the proceeds ($75,000).

Timing can also affect your rights based on when you or your partner leaves the matrimonial home. It’s important to seek legal counsel as early as possible when considering a separation.

Does My Spouse Have Any Right to My House if I Owned It Before Marriage in Ontario?

What happens to property owned before marriage in Ontario depends on whether it was the matrimonial home. If your spouse moves in after marriage, they have a right to the property unless you have a marriage contract that states otherwise.

If you own an income property before you get married, your spouse doesn’t have a right to it initially. However, any income earned and equity growth after the marriage gets added to the Net Family Property. Thus, a $500,000 home that you bought but don’t live in is yours and yours alone. However, if it increases in value to $550,000, $50,000 will be added to the FNP, which will then be equalized in the divorce.

What if you own a cottage or vacation house that you and your spouse visited together throughout your marriage? This can be a contentious issue, as the courts could state that this became matrimonial property.

Unlike the Principal Residence Exemption, you can have more than one matrimonial home. If there is a pattern of visiting the house as a family, such as every summer or even a few weeks every year, the property you owned before marriage could be considered part of the FNP. If in doubt, always consult with a lawyer.

Who Gets the House in a Divorce With Children?

This is one of the first questions anyone asks when divorce becomes a possibility. There isn’t a single answer that works in every situation. Sometimes, the family’s financial state requires the house to be sold for a fair and equitable division of assets.

However, separation is particularly hard on children. Allowing them to stay in their home can provide a sense of stability even when everything else changes. If possible, one partner can consider buying out their spouse’s share of the matrimonial home.

Where can you turn for support when selling your home in a challenging situation? The posts below can provide some much-needed guidance:

• Our Full-Service Real Estate Team’s Guide to Marketing Your Home
• The Power of Staging When Selling Your Home
• Fact Vs Fiction About Working With A Real Estate Agent

How to Buy Out a Partner in a House

In 2024, the Canadian Mortgage and Housing Corporation updated its guidelines to make it easier to buy out a spouse from the matrimonial home. Traditionally, a lender would only consider refinancing a home for 80% of its value.

Under the newest version of the CMHC Spousal Buyout Program, you or your partner can potentially refinance at up to 95% of the home’s value. However, you would still need to qualify for a loan based on your ability to cover the mortgage payments and other carrying costs on your own.

A separation or divorce can feel overwhelming while you’re in the middle of it. During your darkest moments, try to remember that a fresh new beginning is around the corner. The support of loved ones and expert guidance will help you come out stronger and ready for a new chapter of your life.

Do you have more questions about your specific situation or want a customized plan for selling your home? Our top agents in Hamilton & Burlington can give you the answers you need. Reach out today with any questions or call 905-332-9223 to connect with our office.