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Posts tagged ‘matrimonial home’

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.

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.

 

Can a Sailboat Be a “Matrimonial Home”?

boat hom

Can a Sailboat Be a “Matrimonial Home”?

I have written in prior blog  “5 Things That Make the Matrimonial Home Unique”  that the definition of “matrimonial home” is generally defined by Ontario Family Law Act as being any property “ordinarily occupied” by the spouses and their family on the separation date. This can include any type of housing including condominiums and mobile homes; in some cases the definition will even extend to cover a frequently used second-home, most often a family cottage.

But what about a sailboat? Can it be a “matrimonial home” too?

This was the question in the older case of Clark v. Clark. After separation the wife and youngest daughter continued to live in the house that they all had previously shared, but when he moved out the husband took with him a 29-foot sloop. The court found that the family “generally had a tradition on this boat during the summers for a good number of years”.

In considering the definition of “matrimonial home” under the applicable law (which in this case was the predecessor to the current Ontario Family Law Act), the court said:

I think a cottage has been in a sense declared a matrimonial home, being an adjunct of the regular home of the family, in the past, and I frankly see no reason why the extra home or cottage should therefore be restricted to a question of evaluation of accommodation or mobility, once the principle of an alternative home has been established. The fact that that alternate home moves in some way, and that it may be difficult to locate under some circumstances, or that it may have some restrictions of accommodation I think is not necessarily relevant, as long as it is shown that the general use of the property or thing has been used by the family as an alternative residence while the family was on vacation.

While dismissing the husband’s stated concerns over the wife’s competency and ability to maintain and take care of the sailboat, the court declared the home an alternative matrimonial home and transferred exclusive possession to the wife for a particular long weekend that she had requested, to be returned to the husband afterward. In this context – and after adding that it had assessed the wife’s ability to manage and care for it – the court concluded that the wife was capable of operating the boat in a satisfactory manner, but added that she “should not take the boat under any circumstances unless she is assured, as well as the husband, that there is sufficient insurance on the boat and that it is effective while she has the boat in her possession.”

For the full text of the decision, see:

Clark v. Clark (1984), 40 R.F.L. (2d) 92, 1984 CarswellOnt 241 (Ont. Master)

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.

Mortgage Default and the Matrimonial Home

 mat home

Mortgage Default and the Matrimonial Home

As if Family Law wasn’t complicated enough, scenarios involving separation and divorce can get tricky in cases where the matrimonial home is subject to a mortgage that goes into default because the mortgage payments have not been kept up.

Fortunately, Ontario’s Family Law Act makes special provision to deal with at least one of the trickier scenarios. To illustrate:

Let’s assume that only one of the spouses has legal title to the matrimonial home, which is subject to a mortgage. But – as regular readers of my blog will know – one of the provisions of the Act expressly grants both spouses and equal right to possession, irrespective of which of the spouses has legal title. Furthermore, if the couple decides to separate, a court may decide after assessing the situation that the spouse who does not own legal title should nonetheless have exclusive possession of (i.e. the right to live in) the home pending a final determination of the issues between them.

So in our sample scenario, the spouses have separated and the non-titled spouse has possession of the matrimonial home.

Next, let’s suppose the mortgage payments on the home aren’t made, and the mortgage goes into default. The lender wants to exercise forfeiture or power of sale proceedings.

A different provision of the Act states that, where someone like a lender is looming due to a mortgage default, the spouse with the right to possession has the same right of redemption or relief against forfeiture as the other spouse, and is equally entitled to notice about the lender’s intended steps.

In other words, even if the spouse doesn’t have legal title to the matrimonial home, the legislation grants him or her not only the same right to possession as the other spouse, but also the same redemption rights that arise to allow for relief against forfeiture. He or she must comply with the same rules of procedure and legislation as the other spouse, in connection with how those rights are to be exercised.

These provisions strive to strike a fair balance between: 1) the spouse who has legal title; 2) the spouse who doesn’t have title, but has court-ordered possession; and 3) the lender who is poised to exercise its rights triggered by the default on the mortgage.

Do you have questions about the effect of a mortgage default on a matrimonial home? We can help.

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 www.RussellAlexander.com.

 

Husband Continues to Live in Home After Split – Should He Pay Occupation Rent to the Wife?

transfer

Husband Continues to Live in Home After Split – Should He Pay Occupation Rent to the Wife?

The couple, who had married in 1973, separated almost 40 years later. During the marriage the husband had worked at a local mill and mine, while the wife had a traditional role and stayed home to raise their children.

They owned the matrimonial home jointly, and the husband continued to live in it after they split.

The wife applied to the court for an order that the matrimonial home should be listed for sale; she also asked the court to order the husband to pay her occupation rent, pending the eventual sale.

After considering the various factors, the court granted part of her request forcing the home to be listed – even though the home was located in a small mill town where the mill had closed, there was still a market for real estate in the area and the home was to be listed at a mutually-agreed price after consulting with a realtor.

However, the court declined to order the husband to pay occupation rent. Pointing out that its ability to make such an order was fully at its discretion, the court still had to balance the various relevant factors to determine whether ordering occupation rent was reasonable in all the circumstances. It concluded that at this stage, such an order would be premature.

This was because the current arrangement allowed the husband to live in the house inexpensively, so it did not make sense to force him out of the home in the winter when there was no one available to look after it. Instead, the court ordered that the house did not have to be put on the market until April, and the proceeds could be put into trust until the court made another order.

For the full text of the decision, see:

Charron v. Charron (2014), 2014 ONSC 496, 2014 CarswellOnt 694, J. deP. Wright J. (Ont. S.C.J.) [Ontario]  http://canlii.ca/t/g2s0h

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 www.RussellAlexander.com.

Occupation Rent – The Basics

occ rent 

Occupation Rent – The Basics

In Ontario, “occupation rent” is a Family Law concept that actually had its origins in the agricultural and commercial world. It can theoretically apply to any situation where spouses who are co-tenants or co-owners of a matrimonial home have decided to separate, and one of them has physically moved out.

The concept of occupation rent is simple: The spouse who continues to live in the home post-separation (the “occupying spouse”) is responsible for paying fair-market-value rent to the other spouse (the “non-occupying spouse”), for the time period that spans from the separation date until the parties sell the property and divide and equalize their family property as part of the divorce process.

For the spouse who remains in the home, the obligation to pay occupation rent is usually imposed by a court pursuant to the Family Law Act, which authorizes it in the right circumstances, provided he or she has been awarded exclusive possession. (Technically, however, the requirement to pay occupation rent can also arise under the common law, which does not have the exclusive-possession order as a pre-requisite).

Occupation rent is not mandatory in every case; rather, courts have the discretion to order it where the circumstances dictate. There are a number of considerations that a court must take into account, namely:

• the conduct of the non-occupying spouse (including his or her failure to pay support);

• the conduct of the occupying spouse (including his or her failure to pay support);

• delay in making the claim for occupation rent;

• the extent to which the non-occupying spouse has been prevented from having access to his or her equity in the home;

• whether the non-occupying spouse moved for the sale of the home and, if not, why not;

• whether the occupying spouse paid the mortgage and other carrying charges of the home;

• whether children resided with the occupying spouse and, if so, whether the non-occupying spouse paid, or was able to pay, child support;

• whether the occupying spouse has increased the selling value of the property.

Note that to balance out the occupation rent the occupying spouse has to pay, he or she will get credit for any expenses that had to paid, such as mortgage payments, utilities and other normal upkeep and household expenses.

Do you have a situation that might call for occupation rent to be paid? It is important to understand the concept, whether you are the one paying the rent or not. 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 www.RussellAlexander.com.

Did These Separated Spouses Intend to Change Title to their Matrimonial Home?

consent

Did These Separated Spouses Intend to Change Title to their Matrimonial Home?

The question in a recent Ontario case called Hansen Estate v. Hansen was whether the husband and wife had engaged in a “course of dealing” that established that their joint tenancy in the matrimonial home was severed, so that they became tenants-in-common. (And the question of whether the husband’s daughters could inherit his share of the matrimonial home hung in the balance).

The two spouses owned the matrimonial home as joint tenants: this meant that if either of them died, the other would obtain the right to exclusively own the home – a concept known as the “right of survivorship” under the law of joint tenancy.

On the date of the husband’s death, however, he and his wife were legally separated, and were in the process of dividing up their matrimonial assets. His Will, which had been drawn up slightly before his death, provided that his entire estate would be left to his four daughters from a previous marriage.

The problem was that his estate consisting mainly of the matrimonial home, the entirety of which the wife would inherit through her right of survivorship. (In law, the right of survivorship takes precedence over any disposition in a joint tenant’s will).

Two of the daughters went to court to claim that although title to the matrimonial home was jointly held, the conduct by the now-separated husband and wife immediately before his death showed that they intended to sever that joint tenancy and create a tenancy in common instead. This would mean that, under the law relating to that style of title ownership, one-half of the matrimonial home would become part of the estate and available to be distributed under the Will.

The Ontario Court of Appeal agreed with the daughters. It said the “time-honoured test” for determining whether a joint tenancy was intended to be severed was to see whether there was a “course of dealing to intimate that the interests of the parties were mutually treated as constituting a tenancy in common.”

In this case, the conduct the Court cited to support a mutual change to a tenancy in common included:

• The wife moving out of the home and rented accommodation elsewhere,

• The husband taking over payment of the expenses, and his putting the bills in his own name,

• The locks being changed on the home,

• The husband making a new will that named his children (rather than the wife) as beneficiaries (and the matrimonial home was his only significant asset),

• The husband and wife closing their joint bank accounts, and each opening a separate account,

• Both of them retaining their own lawyers,

• Both of them agreeing to exchange financial information to carry out their property division.

The wife had also offered that the husband could “buy out” her interest in the home; the husband did not object to her suggestion that it would otherwise need to be sold.

Here, there admittedly was no explicit agreement between the husband and wife at separation to sever the joint tenancy. However, in light of the course of dealing between the spouses – and taking into account the matrimonial context – there was evidence that this was what they intended.

Therefore, rather than the full ownership going to the wife, the court ruled that one-half of the interest in the matrimonial home was part of the husband’s estate, and available to the daughters as beneficiaries.

What is the lesson to be learned? If separated spouses truly intend to sever their joint tenancy, they may want to enter into an interim agreement to this effect. Alternatively, they may want to change the manner in which they hold title: they can arrange for a registered transfer to themselves, but as tenants in common rather than joint tenants.

Similarly, future spouses who are considering getting married may want to enter into a cohabitation agreement which includes a provision that if the relationship breaks down, title held jointly is automatically severed.

For the full text of the decision, see:

Hansen Estate v. Hansen, 2012 ONCA 112  http://canlii.ca/t/fq6xz

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 www.RussellAlexander.com.

We’re Officially Separated – Can I Change the Locks on the House?

lock

We’re Officially Separated – Can I Change the Locks on the House?

When a couple first separates under contentious circumstances, I will often get questions about what each party’s respective rights are in the early stages, i.e. before the long process has started of formally dividing up their assets and dealing with any support and child-related issues. One of the most common questions is whether the spouse who remains in the matrimonial home after separation can change the locks in order to exclude the other spouse.

In Ontario, the short answer is: No.

If the now-separated married couple were living in the matrimonial home, and one of them has moved out, neither the Family Law Act nor other legislation entitles the remaining spouse to change the locks. This is because under that legislation the matrimonial home is afforded special status: both spouses are expressly granted an equal right to possession of it. This right of equal possession subsists even after separation unless or until:

1) there has been a separation agreement reached between the parties; or

2) a court order has been granted to establish that one of the spouses is entitled to what is known as “exclusive possession” of the matrimonial home pending a family trial. (And note that once exclusive possession has been granted to one of the spouses, he or she obtains the sole right to live in the home, regardless of who owns legal title.)

Unless one of these mechanisms is in place to override what is otherwise each spouse’s equal right to stay in the home, neither can formally lock out the other. In fact, both spouses will have a right to actually live in the home until a resolution on possession of the home is reached. For obvious reasons, however, this is usually untenable because most separations occur under very high-conflict, emotional-charged circumstances.

But even if one spouse has moved out, he or she is not entitled to come-and-go at will. Rather, there must be adequate and reasonable notice given of any intention to return, for example to retrieve any personal property that has been left behind. Similarly, if a court order for exclusive possession has been obtained in favour of one spouse, it will usually be a term of that order that the other spouse can periodically re-enter for specific purposes, with notice in advance. In this context the court may also order the locks to be changed, if the circumstances between the parties warrant it.

Finally, it is important to note that the order for “exclusive possession” is merely that; it does not give the remaining spouse the right to sell or dispose of any of the furniture or other belongings until all of the separation and divorce issues, including equalization of net family property, have been fully resolved by a court.

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 http://www.russellalexander.com/practice/family-property-division-and-sharing/