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.