Divorce: Who Gets the Cottage?
Cottage season is slowly winding to a close. Especially in light of the COVID-19 pandemic, which curtailed vacations to other destinations and posed many challenges, the family cottage may have been a bright spot on somewhat a bleak horizon, and the focal-point of many cherished memories during the past few months.
But when it comes to divorcing spouses, how are family cottages divided under Ontario law?
The short answer is: It’s complicated. The answer may depend on how and when the cottage was acquired, and how it was used by the spouses and family during the marriage.
The first complicating element is that in the right circumstances, an Ontario cottage may meet the legal test for being a second “matrimonial home”, as long as it meets the test of being habitually occupied by the family. (This can even include seasonal rather than year-round cottages, provided it meets that test).
If the cottage does qualify as a “matrimonial home”, then it is governed by the specific provisions of the Ontario Family Law Act that set up special status for the matrimonial home, including granting both spouses an equal right to possession. (A recent example of this is a case called Lowe v. Lowe.)
If the cottage does not qualify as a matrimonial home, then it might come down to how and when it was obtained by the spouses. Perhaps it was a gift to both of them during marriage (e.g. where it is a longtime family cottage owned by one of the spouse’s parents, who gift it to the couple before or during the marriage, with title going into the spouses’ joint names).
If it was gifted to one of the spouses before the marriage, then there may form an exclusion from what would otherwise be his or her Net Family Property under the Family Law Act (in s. 4(1)). And if it was purchased by one of them prior to marriage, then he or she is entitled to a date-of-marriage deduction of its value. (An example of this is Bilas v. Bilas).
Finally, if it the family cottage was gifted to, or purchased by, the spouses during the marriage, then it is treated during the division of assets and the equalization process just like any of the couple’s other non-matrimonial-home assets . In this context the court will look a number of factors, such as how title to the cottage is held and what the spouses intended at the time.
What if one of the spouses wants to protect their interest in a family cottage, and obtain a different outcome from the ones described above? The best way to ensure this, is for them to negotiate and agree to a marital contract that covers it. For already-married spouses with an Ontario cottage, another option is for them to legally designate it as a matrimonial home, and bring it under the protections of the Family Law Act. Both of these options can be discussed with an experienced Family lawyer.
For the full text of the decisions, see:
Lowe v. Lowe, 2020 ONSC 5224 (CanLII)
Bilas v. Bilas, 1994 CanLII 18163 (ON SC),