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Posts from the ‘Matrimonial Home’ Category

Wednesday’s Video Clip: Transfer of Property in Ontario – Separation or Divorce


Wednesday’s Video Clip: Transfer of Property in Ontario – Separation or Divorce

In Ontario, whenever there’s a marriage breakdown, and spouses separate or divorce, if they jointly own property, then usually one spouse will release his or her interest in that property, either in return for an equalization payment or other predetermined benefit.

In this video, we explain how transfers of property in Ontario work, focusing on mortgage issues, equalization payments, and land transfer tax; and what documents and information you will be asked to bring to an appointment.

At Russell Alexander, Family Lawyers our focus is exclusively family law, offering pre-separation legal advice and assisting clients with family related issues including: custody and access, separation agreements, child and spousal support, division of family property, paternity disputes, and enforcement of court orders. For more information, visit us at RussellAlexander.com.

Ten Years Later, Court Overturns Agreement Due to Husband’s Non-Disclosure

Hiding Money

Ten Years Later, Court Overturns Agreement Due to Husband’s Non-Disclosure

Although the recent Ontario Court of Appeal decision in Tadayon v. Mohtashami is not all that exceptional, it serves as an excellent illustration about how even many years later, one spouse’s past misdeeds can still come back to haunt him or her, in the context of the obligation to provide full disclosure in family law litigation.

The parents of three children had separated in 1999. They entered into a separation agreement as part of their divorce in 2005.

At that time, the husband had reported that he anticipated earning $80,000 that year, and the agreement was reached with that figure in mind. Its terms required the husband to pay relatively modest amount for combined spousal and child support, and allocated him certain levels of financial responsibility for the purchase of a home for the wife and children. All of these commitments and obligations were made on the strength of the husband’s reported income of $80,000 for 2005.

In reality, his income for the prior year was already much higher than that (at $147,000), and it turned out that for 2005 he actually earned an income of $344,000, comprised of income from his own general contracting company, together with undisclosed amounts he also earned from a home building venture. All of this information was kept from the wife at the time, and none of it was taken into account when the 2005 agreement was reached between them.

Fast-forward 10 years, when the wife discovered that the husband had concealed these income amounts from her. She applied to the court to have the 2005 agreement set aside, and to have both child and spousal supports for several sequential years recalculated with the correct figures in mind.

That application was allowed by the lower court, and the husband’s subsequent appeal was dismissed. Even viewed a full decade later, both courts confirmed that the husband’s then-failure to disclose these significant income amounts undermined the validity of the 2005 agreement. Had the wife known the correct financial information, she would never have signed it.

(Moreover, the court pointed out that the husband could not claim that he would be prejudiced by the wife’s late-breaking objection to the non-disclosure; they had jointly retained an expert income valuator, so it could have come as no surprise to him that the accuracy of his figures would soon become an issue).

The bottom line was that the husband had an obligation to make full and proper financial disclosure in 2005 when the agreement with the wife was made in the first place; the agreement was accordingly unconscionable and even despite the passage of time the court was justified in overturning it now.

For the full text of the decision, see:

Tadayon v. Mohtashami, 2015 ONCA 777

At Russell Alexander, Family Lawyers our focus is exclusively family law, offering pre-separation legal advice and assisting clients with family related issues including: custody and access, separation agreements, child and spousal support, division of family property, paternity disputes, and enforcement of court orders. For more information, visit us at RussellAlexander.com

Seven Adult Kids Pool Their Money So Mom Can Buy Family Home – So Whose House is it?

brady

Seven Adult Kids Pool Their Money So Mom Can Buy Family Home – So Whose House is it?

The dispute in Andrade v. Andrade was factually-complicated in the way that only family arrangements can be: At its heart was the legal ownership of a home that had been in the family for 40 years. It involved a mother of seven children in a very tight-knit family, together with commingled family funds and undocumented intentions. And it was triggered by a daughter-in law’s desire to have her deceased husband’s contribution toward the home’s purchase-price recognized in law.

The mother of those seven children was named Luisa; she lived in the home from the time it was purchased in 1974, right up to her death in 2014. The initial problem was that both the $58,500 purchase price for the home, as well as virtually all the money needed for mortgage payments and upkeep, had historically come from her unmarried (and now-adult) children, not from Luisa herself. As the trial judge explained:

Everyone who testified at trial … described a tight-knit family that greatly respected and continuously supported their mother, and that tended to pool resources to an unusual extent. As each child left school and began their working lives, they contributed their paycheques (or a substantial portion thereof) to their mother for her support and for support of the children still too young to work.

For each of Luisa’s seven children, this pooled-earnings arrangement ended only when they married and moved out of the home. This meant that the source of the money used to purchase and maintain the home had always been commingled and indistinct.

But an added legal problem arose from the manner in which title to the home was taken: Soon after it was purchased in 1974 the home was put in the names of two of Luisa’s sons, one of whom was named Joseph. Along with his other unmarried siblings, Joseph had been contributing his earnings to the pooled family funds, until he married a woman named Manuela.

After Joseph died, it was this Manuela (i.e. Luisa’s daughter-in-law) who brought an action to have the court make a declaration as to the rightful ownership of the family home that Luisa still lived in. In the role of widow and executor of her deceased husband Joseph’s estate, Manuela asked the court to declare her to be a beneficial owner of a half-interest in the home, in recognition of Joseph’s financial contribution towards its purchase and maintenance, as well as his status on title.

Luisa, in contrast, asked the court to declare that she owned the entire home herself, even technically though she did not hold legal title. (And Luisa died before the trial, but the action was carried on by her estate. She was unsuccessful, and her estate appealed).

Central to the trial court’s earlier ruling was the conclusion that – light of the family’s pooled-fund arrangement – Luisa “had no money of her own”. This meant she could not have made any financial or other legally-recognized contribution to the house that she technically did not even hold title to.

This conclusion, the Appeal Court found, was a mistake. Simply because the source of Luisa’s money was through gifts from her unmarried adult children (rather than employment income that Luisa may have earned herself), this did not mean it was not her money. This conclusion remained true even if those adult children gave with the intention that Luisa would use the money to support other family members.

Moreover, at various times over the years Luisa had single-handedly rented out parts of the home and was also in receipt of both old age security and a legal settlement, all of which funds were deposited into her own bank account and used for mortgage payments, home maintenance, and expenses. These funds also counted as Luisa’s money for the purposes of crediting her with a contribution to the home. In contrast, none of the adult children ever made such payments or contributions, and the court found that none were expected to.

The key time for assessing the legal situation, and Luisa’s intentions especially, was at the time the property was purchased in 1974. Using that reference-point, there was nothing to indicate that Luisa intended to buy the home for her children’s legal benefit, or to gift it to two of her sons, even though she may have put title into their names.
The Appeal Court found that the situation gave rise to a “purchase money resulting trust” in Luisa’s favour for the full value of the home; this recognized Luisa’s legal interest notwithstanding that title was registered to her two sons.

For the full text of the decision, see:

Andrade v. Andrade, 2016 ONCA 368 (CanLII)

At Russell Alexander, Family Lawyers our focus is exclusively family law, offering pre-separation legal advice and assisting clients with family related issues including: custody and access, separation agreements, child and spousal support, division of family property, paternity disputes, and enforcement of court orders. For more information, visit us at RussellAlexander.com

Can One Spouse Foist Debt on the Other?

Businessman Touching Domino Pieces Arranged in a Line

Can One Spouse Foist Debt on the Other?

As we have written before , Ontario law has special rules about how a matrimonial home can be dealt with by spouses during marriage. But what about other assets? And who is ultimately responsible for any debts incurred while married?

Let’s tackle the easiest one first: Assets. From a technical legal perspective, each spouse is generally free to deal with his or her own assets during marriage. (This of course leaves aside the practical reality that in a successful marriage both spouses may have informal input on how assets are dealt with, regardless of true ownership).

The responsibility for debts, on the other hand, is a little more complex. Here are some points to know:

• Getting married does not automatically make you responsible for the existing, pre-marriage debts of your new spouse.

• During marriage, each spouse is only responsible for those (non-joint) debts that are incurred in his or her own name; the other spouse is not responsible unless they have guaranteed or co-signed the loan in writing. (And the Family Law Act provides for the deduction of these debts when the parties separate, for the purposes of calculating the Net Family Property, although exceptions are made if the debts are incurred recklessly or in bad faith.)

• Death does not change this: If one spouse dies leaving personal debts, the other is not personally responsible to repay them. However, creditors are entitled to be paid out of the deceased spouse’s estate prior to having those assets distributed to beneficiaries, including the surviving spouse.

• On the other hand, debts that are incurred jointly during marriage (e.g. a joint loan agreement, or where one spouse co-signs for the other), become an obligation that is shared by both spouses.

• Note that for such jointly-incurred debt, a separation agreement is ineffective to change or eliminate the respective obligations of the spouses to lender. Rather, any change as to who is responsible for the joint debt has to be re-negotiated with the original lender and reduced to writing in a new agreement.
With that said, credit card debts are in their own category: To determine which spouse is responsible for credit card debts, it is necessary to review what the written agreement with the credit-providing bank or organization says. Specifically:

• The agreement may provide that one spouse is the primary cardholder, but that the other spouse is also given access/authority to incur charges (usually through a second card). These kinds of agreements usually stipulate that the spouse who is the primary cardholder remains liable for all charges.

• On the other hand, if both spouses sign the cardholder agreement and commit to being jointly responsible, then they both remain liable for any charges.

• Note that in either case, this liability arises not through the fact of marriage, but because the written agreement with the credit-providing facility says so.

Do you have further questions on how debts during marriage are treated?

At Russell Alexander, Family Lawyers our focus is exclusively family law, offering pre-separation legal advice and assisting clients with family related issues including: custody and access, separation agreements, child and spousal support, division of family property, paternity disputes, and enforcement of court orders. For more information, visit our main site.

Transfer of Property in Ontario During a Separation or Divorce – video

 

 

Wednesday’s Video Clip: Transfer of Property in Ontario During a Separation or Divorce

In Ontario, whenever there’s a marriage breakdown, and spouses separate or divorce, if they jointly own property, then usually one spouse will release his or her interest in that property, either in return for an equalization payment or other predetermined benefit.

In this video we examine how transfers of property in Ontario work, focusing on mortgage issues, equalization payments, and land transfer tax; and what documents and information you will be asked to bring to an appointment.

Do 20-Something Kids Need to Stay in the Matrimonial Home for “Stability”?

20 olds

Do 20-Something Kids Need to Stay in the Matrimonial Home for “Stability”?

Common among parents these days is the complaint that their “kids” – meaning adult children over the age of 18 – are staying longer at home before moving out on their own, or worse, are returning home after finding that independent living or navigating the job market is tougher than they anticipated.

It begs the question of how much emotional and financial support young adults need (and expect) in the modern family context.

In a recent case the court had to consider whether kids in their 20s needed to remain in the luxurious former matrimonial home for “stability”, after their parents split and until a divorce trial could be held. (The question of whether for family law purposes they were considered “children of the marriage”, and therefore eligible for child support longer-term, would have to be determined at a later trial.)

The facts were these: After a 17-year marriage, the couple separated and brought a court motion to determine the question of how their $1.5 million matrimonial former home should be dealt with. Their three children – currently aged 19, 22 and 25 – were all still living in the home with the father. As the court described the situation: “there is unanimity of opinion that the children are accomplished, high functioning young men with goals and aspirations that their parents encourage and have to date supported financially and otherwise.”

During the marriage, the couple split their income, and the wife went on title as owner of the home. However the husband originally owned the land on which the home was built, had paid all the home maintenance and carrying costs throughout the marriage, and had invested $200,000 into renovations. It was still subject to a debt of about $600,000, and the husband would be seeking an equitable interest in the home at the pending divorce trial.   After a 2013 flood, the couple received insurance funds for repair, but the amount remained unspent because they were unable to agree on how those insurance funds should be spent, and when.

Against this background the wife, who had moved to the Cayman Islands to pursue studies at a veterinary college, applied to the court for an order to have the matrimonial home repaired, listed and sold.   Although the husband was not opposed to the sale at some future date, he resisted selling it now since he was adamant that the home provided security and stability for the children.

The court began by observing:

“The youngest child will become an adult in November of this year; the older two are in their twenties now. Upon the evidence currently available, whether or for how long these young men will continue to live in the matrimonial home is speculative at best.”

The court then pointed out that although the husband earned $320,000 per year, his expenses for housing himself and his sons in the existing home would likely not be satisfied by his remaining (though still substantial) income after he had paid interim spousal support to the wife pending trial.

More to the point, there was no realistic need to maintain that particular house for the stability of his adult or near-adult children, nor was there any reason to delay the repair and sale of the home until trial.   To do so would be to merely add time to the already-lengthy process of translating the asset into funds that could be allocated by the parties in the proportion yet-to-be adjudicated at trial.

The court ordered that within 30 days the parties should agree on how to spend the insurance proceeds to repair the home, failing which the wife would have the authority to deal with the insurance and repairs, and choose an agent with which to list. The court added:

“If an acceptable offer to purchase the property is received, the [wife] shall offer the respondent the opportunity to sign as a spouse on the acceptance of the offer. If the [husband] refuses to sign the offer before it expires, the [wife] is authorized hereby to proceed with the sale without the [husband’s] consent.”

For the full text of the decision, see:

Goodman v. Goodman, 2014 ONSC 3466

At Russell Alexander, Family Lawyers our focus is exclusively family law, offering pre-separation legal advice and assisting clients with family related issues including: custody and access, separation agreements, child and spousal support, division of family property, paternity disputes, and enforcement of court orders. For more information, visit our main site.

 

Husband Threatens to Burn Down Matrimonial Home; Can Wife Get Him Excluded While He is Away on Holiday?

match

Husband Threatens to Burn Down Matrimonial Home; Can Wife Get Him Excluded While He is Away on Holiday?

When the husband and wife married, they moved into a heavily-mortgaged home that had been purchased with funds provided entirely by the wife. They signed a pre-nuptial agreement providing that if they separated, the wife would be repaid those funds from the sale of the home prior to any equalization.

When the parties did split three years later, the wife stayed in the matrimonial home while the husband, who was a self-employed contractor, moved into a 20-foot trailer home equipped with kitchen, bathroom and sleeping quarters. However, the split was very acrimonious.

The wife brought an urgent ex parte motion – i.e. without notice to the husband, who was on holiday out of the country – asking that she be given exclusive possession of the home. She also asked for a restraining order. As the court explained:

The [wife] brings this motion in this way because she is fearful about the [husband’s] reaction to her decision to end their relationship. While I am careful not to make definitive findings of fact given the ex parte nature of this proceeding, I note the [wife’s] affidavit evidence to the effect that the [husband] is a volatile and violent alcoholic. As she tells it, he has been intimidating and verbally abusive toward her for years. In the past year, he has been physically assaultive by pushing her and has even gone so far as to place his hands around her neck as if to threaten to choke her, removing them only when the children pulled him away. As recently as February or March 2014, the [wife] indicates that as the relationship deteriorated, the [husband] threatened to burn the matrimonial home down if he could not live in it. She says he even brought a can of gasoline inside to show that he means business. In sum, the [wife] describes a pattern of behaviour on the part of the [husband] that has been escalating in its abusiveness in the form of real and threatened violence.

The court added:

Indeed, it is partly because of the [husband’s] complete lack of financial stake in the property that the [wife] fears he will come through on his promise to burn the house down.

Since the husband was unaware of the motion and was not in attendance, the court pointed out that “as a simple matter of fundamental justice” it could not draw definitive conclusions after hearing only the wife’s side of the story. But that did not mean it should ignore her evidence altogether. As the court put it:
My objective is to put in place a structure to keep the peace while at the same time respecting the [husband’s] right to meaningfully participate in any proceeding infringing upon his interests. In my view, reducing the risk of violence or allegations of violence in this household is in the best interests of all involved and is a goal that is called for given the evidence and which outweighs the [husband’s] property rights in the short-term.

Even though the husband was not present, the court granted the order for exclusive possession until trial, as well as the restraining order, but ordered the matter be returned to court in 10 days to give the husband a chance to be heard. Although under Ontario family law both spouses had an equal right to possession of the matrimonial home, there are acknowledged exceptions; given the potential for violence and the fact the husband had other accommodation, this case was one of them.

For the full text of the decision, see:

Clark v. Westendorp, 2014 ONSC 3490 (CanLII)

At Russell Alexander, Family Lawyers our focus is exclusively family law, offering pre-separation legal advice and assisting clients with family related issues including: custody and access, separation agreements, child and spousal support, division of family property, paternity disputes, and enforcement of court orders. For more information, visit our main site.

Can Second Wife Foil Court Order Securing First Wife’s Support?

 second-wife

Can Second Wife Foil Court Order Securing First Wife’s Support?

In Watkins v. Watkins – which essentially pitted the rights of a man’s first wife against those of his second one – the court considered whether it could encumber a matrimonial home, even if spouses were prevented from doing so.

In that case, in connection with his home the husband was ordered by the court to sign a collateral mortgage in favour of his first wife, from whom he was now divorced. This was intended as security for what he owed her for existing and future spousal support, child support, and legal costs.

However, because he was now married to a second wife – and even though the home was owned solely by him – it was considered a “matrimonial home” under the Ontario Family Law Act, and was therefore subject to the special rules governing its sale, disposition or encumbrance. In particular as I’ve written before, the second wife was legally required to give her consent to the collateral mortgage.

However, the second wife refused to do so, fearing that in the future the home might be sold under the collateral mortgage, thus jeopardizing the security that she and their child have. (Apparently, even though she did not own the home herself, she had put a lot of work into it). Without the second wife’s consent, the Land Registrar refused to register the collateral mortgage.

The husband brought a motion to the court, asking for it to dispense with the second wife’s consent and authorize the collateral mortgage registration in the first wife’s favour.

In granting the husband’s request, the court looked at the purpose of the Family Law Act: It was designed to limit what a spouse was allowed to do in terms of encumbering the home; it was never intended to foil a court’s ability to secure one spouse’s financial obligation to the other.

In this case, the court had itself created the husband’s liability in the form of the collateral mortgage, regardless of what the husband wanted. The order stemmed from the court’s own initiative and by virtue of a prior court order, and – in legal jargon – arose “by operation of law”. The husband had no intentions of his own in this regard.

With this in mind, the court was fully entitled to impose a charge on the home in the form of the collateral mortgage, as a means of enforcing the husband’s legal support obligations to the first wife. The second wife’s consent was accordingly dispensed with and the collateral mortgage was duly registered by court order.

For the full text of the decision, see:

Watkins v. Watkins, 2014 CarswellOnt 5287, 2014 ONSC 2506

At Russell Alexander, Family Lawyers our focus is exclusively family law, offering pre-separation legal advice and assisting clients with family related issues including: custody and access, separation agreements, child and spousal support, division of family property, paternity disputes, and enforcement of court orders. For more information, visit our main site.

 

5 Things That Make the Matrimonial Home Unique – Part 2

5 things

5 Things That Make the Matrimonial Home Unique – Part 2

I have written recently about how in Ontario it’s actually possible to have more than one matrimonial home. That followed on a more general post written some time ago about the matrimonial home’s unique nature under Ontario family law.

It’s never a bad time to revisit the specific elements that make the matrimonial home special, this time with a focus on the court’s right to make Orders in connection with it.

1) Special status. The matrimonial home has special “protected” status under Ontario law. As such, there are certain things that spouses can and cannot do. Most notably, one spouse is not allowed to unilaterally do any of the following, without the other spouse’s consent:

• Lock the other spouse out of the matrimonial home;

• Sell the home;

• Mortgage or re-mortgage the home.

2) Court can make Orders. Depending on the nature and objective of the family litigation, an Ontario court is entitled to make an Orders that can affect your spousal rights to the matrimonial home. The court’s powers in this regard arise under the authority granted to it pursuant to the Ontario Family Law Act, the Family Law Rules, and the Courts of Justice Act.

3) Scope and nature of court Orders. There are a variety of Orders that a family court can make in connection with the matrimonial home, including an Order that only one spouse is entitled to be in possession of (i.e. live in) it, and an Order that one spouse may sell, mortgage or encumber it.

The last type of Order may become necessary in a case where (for various reasons) it is prudent for the home to be sold, mortgaged or otherwise encumbered, or where it makes sense in all the circumstances that one spouse has possession, but where the spouses cannot agree. The court in such cases has the power to make the necessary Order.

4) Mandated considerations. Needless to say, courts don’t take their powers lightly; whenever a court is poised to make an Order that deprives one spouse of his or her rights or interest in the matrimonial home, the court will consider a broad array of well-established factors and considerations. For example, if a court is considering making an Order giving one spouse exclusive possession of the matrimonial home, the court is obliged under the Family Law Act to take into account the following:

• The best interests of the children who may be impacted by the order. Under this heading, the court must consider 1) the possible disruptive effects on the child of a move to other accommodation; and 2) the child’s views and preferences, if they can be reasonably ascertained.

• Any existing court Orders relating to family property, including existing Orders for support;

• The financial position of both spouses;

• Any written agreement between the parties;

• The availability of other suitable and affordable accommodation; and

• Any violence committed by a spouse against the other spouse or children.

5) Other rights not suspended. Finally, the fact that a family court might be entitled to make an Order in connection with the matrimonial home does not mean that other litigation has to cease; a third party (i.e. not either of the spouses) might have rights in connection with a matrimonial home that can be enforced as usual. To give the most common example, there may be a mortgage on the home, which the bank can realize upon if it goes into default.

Do you have questions about the court’s rights to make Orders affecting the matrimonial home? Feel free to contact our office.

At Russell Alexander, Family Lawyers our focus is exclusively family law, offering pre-separation legal advice and assisting clients with family related issues including: custody and access, separation agreements, child and spousal support, division of family property, paternity disputes, and enforcement of court orders. For more information, visit our main site.

Cottages as Matrimonial Homes – It Can Get Complicated

cottage-home-2

Cottages as Matrimonial Homes – It Can Get Complicated

With the recent improvement in the weather, it seems my mind is on cottages lately. I have written before  that matrimonial homes enjoy special legislated protection under Ontario family law. I have also written about how second homes and often-used cottages – and sometimes even sailboats can sometimes satisfy the legal requirements for what constitutes a “matrimonial home” in some cases.

Sometimes the status of a particular property falls into the “grey zone”, or separated/divorcing spouses may disagree as to whether it should be included as part of their matrimonial home. In such cases it may be necessary to go to court to get a declaration one way or the other.

The recent case of Logotech v. McConnell included this kind of application – but it was actually a lender who dragged the married couple to court to get the declaration. This is because there were several other elements in the mix, namely: the lender, a failed investment, a mortgage in default, a looming power of sale, the husband’s bankruptcy, and an injunction application. All of this “thickened the plot”, legally speaking.

The husband had mortgaged certain Muskoka cottage property he owned as part of a family compound of several cottages. To do so he swore a declaration – which the court later concluded was likely false – to the effect that the properties were not occupied by him and his wife as family residences, and that a different property had been designated as a matrimonial home. This technically eliminated the need to get his wife’s written spousal consent to the cottage mortgage, so it was all arranged without her knowledge.

When the husband allowed the mortgage to go into default, the lender asked the court to declare the cottage excluded from the “matrimonial home” designation, so that it could take unimpeded steps to enforce it security by way of power of sale. It also asked for an order forcing the couple to give up possession.

The wife resisted, and in fact asked the court for an injunction to stop the lender’s mortgage enforcement process until the entire matter could be brought to a full trial.

The court looked at the facts, and found many of them in dispute. Contrary to the husband’s sworn declaration, there was actually strong evidence that the family regularly used the cottage during both the summer and the winter each year since 2002. There was also strong evidence that the lender knew the property was a cottage and was used as such. Finally, the validity of the lender’s mortgage was up for debate, they had been arranged by the husband without the wife’s knowledge and without the spousal consent as required by law.

As part of applying the test for an injunction, the court remarked that the wife would naturally suffer irreparable harm if she had to give up possession, pre-trial, of a property in which she likely had a legal interest. When viewed in the balance against the risk of harm to the lender if the injunction is not granted, it was evidence that the wife faced a much more severe risk of harm.

The court granted the wife’s request for injunction, which prevented the lender from taking mortgage enforcement steps, and ordered that the question of whether the cottage was a matrimonial home should be fully explored at trial. The validity of the mortgages would also be given scrutiny by the court at that time.

For the full text of the decision, see:

Logotech Inc. v. McConnell, 2012 ONSC 4386

At Russell Alexander, Family Lawyers our focus is exclusively family law, offering pre-separation legal advice and assisting clients with family related issues including: custody and access, separation agreements, child and spousal support, division of family property, paternity disputes, and enforcement of court orders. For more information, visit us our main site.