Going through a divorce is never easy, and one of the biggest emotional and financial questions couples face is: Who gets the house? For homeowners in Canada, and especially here in Ontario, the answer isn’t always straightforward.
As a real estate agent who’s helped many families navigate this difficult stage with care and empathy, as someone who has experienced going through a divorce myself, I want to share some insight into how property division works and how the law treats homes in divorce.
How Are Assets Divided in a Divorce?
In Canada, divorce laws fall under federal jurisdiction, but provincial laws govern the division of property. The Family Law Act in Ontario outlines how assets are divided after separation.
Here’s the short version:
- Each spouse keeps what they own, but…
- The increase in the value of assets during the marriage is shared.
- The goal is to equalize the net family property (NFP) each spouse accumulated during the marriage.
In my experience, the most crucial part of dividing assets is the legal separation agreement. In writing, this piece determines who gets what, and both sides must agree with each other and get their own independent legal advice.
Wondering what happens to a home after one spouse passes away? Click here to learn about this unique situation.
How to Create a Separation Agreement
Together with my ex-wife, we created a legal separation agreement that divided everything we had accumulated together in a fair way. We had to consider every detail, indemnifying each other, which removes all liability to each other.
In our situation, my ex-wife wanted to keep the matrimonial home, which she did, but she had to get a new mortgage in her name. Once the legal separation was drafted, my ex-wife took it to her lawyer for independent legal advice. In the end, it worked out well for both of us. The divorce was just an administrative exercise; it took two years to complete from the date of our legal separation.
Don’t Delay
I have seen other situations where people delayed completing a legal separation agreement, only to have it come back and blow up in their faces. As people’s lives move on, inevitably, one person might feel entitled to something that doesn’t belong to them. Maybe things started amicably, but times change, and one party becomes jealous.
It makes for a complex negotiation between the two people. Often, if the legal separation had been done sooner, both people could’ve moved forward without bitterness and regret. Everyone’s situation has unique challenges, but a legal separation agreement is a vital piece of the equation.
If one spouse accumulates significantly more wealth during the marriage, they may owe the other an “equalization payment” to balance things out. Always seek professional legal advice when dividing assets.
What Happens to a House Bought Before Marriage?
If you’re wondering, “Does my spouse have any right to my house if I owned it before marriage in Ontario?”—you’re not alone. This is one of the most common and complex questions I hear. In Ontario, the matrimonial home—regardless of whose name is on title or who bought it—has special legal protections.
Even if you owned the house before marriage, if it was used as your family home at the time of separation, it’s considered a matrimonial home. That means:
- You can’t sell or mortgage it without your spouse’s consent.
- You both have an equal right to possess the home after separation until a separation agreement or court order says otherwise.
- You don’t get credit for bringing the house into the marriage when calculating net family property (NFP).
Consider a Marriage Contract or Cohabitation Agreement
This is by far the most effective tool. A marriage contract (prenup or postnup) or a cohabitation agreement can outline how the home will be treated in the event of separation.
- It can specify that the home’s pre-marriage value remains excluded or that one spouse waives their claim to the property.
- These agreements are legally binding (when properly drafted), and courts generally uphold them unless they’re grossly unfair.
- Once you have it drafted, I recommend getting it reviewed independently by two lawyers—one for each partner.
Selling your home after a divorce can be emotional, but you still want to get a good result from the market. Check out these blogs to learn more.
- Are There Tax Breaks for Senior Home Sellers?
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Case Studies
The Cohabitation Agreement:
I recently worked with clients living together as a blended family; they had kids from previous relationships. When they bought the house, the wife had significantly more equity than the husband (they were living as common-law spouses).
With the advice of her lawyer, a cohabitation agreement was made to protect her if the relationship didn’t work out. Because the relationship didn’t work out, the transition was less stressful and simpler.
The learning lesson is to seek legal advice and to make agreements while everyone gets along. Their agreement had clear language of the steps to take when this situation arose, and the equity that she went into the relationship with was protected and excluded from the proceeds of the sale of the home when it was time to list and sell the house.
The Parents’ Gift:
I worked with a young couple who bought their first house together without any form of legal agreement. His parents provided “gift” money to help with the down payment. Although they were advised to seek legal advice to protect the equity, they chose not to have anything put in writing. A few years later, the couple separated and divorced, and because there wasn’t anything put in writing, the proceeds of the sale of their home were equally shared because it was their matrimonial home.
Is Inherited Property Shared Between Spouses?
If a home was gifted or inherited during the marriage, and not used as the matrimonial home, it can sometimes be excluded from equalization.
Let’s say your parents gifted you a cottage or rental property, and you didn’t use it as your family’s primary residence. The property may be protected. If you moved into it and made it your matrimonial home, that’s different.
This is why it is so important to speak to a family lawyer and a real estate professional who understands these nuances.
When it comes to the matrimonial home, separating couples generally have three options:
- One spouse buys out the other. The buying spouse takes over ownership and possibly the mortgage (use caution if assuming a mortgage…this requires legal advice!).
- Sell the house and split the proceeds. This is common when neither person can afford to stay, or if there’s an emotional attachment on both sides.
- Co-own temporarily. Sometimes couples choose to keep the home jointly for a few years, especially if children are involved, and revisit the decision later.
At the end of the day, no one-size-fits-all solution exists. It depends on finances, emotional considerations, and whether the parties agree.
Looking for insights related to property ownership in Ontario? Explore these related blogs next.
- Is There an Inheritance Tax in Canada?
- How to Transfer Property Title to a Family Member in Ontario
- How Long Does Probate Take in Ontario?
Making it Through a Divorce Stress-Free
As a real estate agent, I know this isn’t just about contracts, it’s about people, homes, and lives in transition.
Here’s how I approach it with my clients:
- I listen first. I want to understand your situation before providing solutions.
- I work with your lawyer. Legal advice comes first; my job is to support those decisions from a real estate perspective.
- I advocate for fairness. Whether you’re keeping the home or letting it go, I’ll help you make good decisions.
Divorce can feel overwhelming, but you don’t have to go through it alone. Proper support makes it possible to come out the other side with clarity and confidence.
Are you considering divorce or currently going through one? Let’s talk about your next chapter. Working with professionals with experience and a network is vital to support you through a delicate transition.
Selling your home after a divorce? I can help! Call 647.283.2127 or email me at stuart@stuartnodell.com to get in touch.
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