Occupation Rent: If Your Spouse Moves Out After Separation, Can They Ask You to Pay Rent?
In a recent case, the Ontario Superior Court considered, among other things, whether a husband, who had remained in the jointly held matrimonial home following a separation, owed occupation rent to the wife who had willingly moved out.
A History of the Parties
The parties married in 1985. In August 2009, the wife told the husband she wanted to separate, began looking for other places to live, and moved out a year later in August 2010.
The husband believed that the value of the matrimonial home had been frozen as of the date of separation, and took no steps to take over title to the home or to finalize equalization (as it had been acknowledged that the value of the wife’s pension would offset her share in the equity). Although the wife received legal advice early on in the process that she would share in any increase in value in the matrimonial home, she did not share this information with the husband and likewise took no steps to finalize equalization.
After separation, the parties treated the matrimonial home as the husband’s property. He remained in the home, paying all expenses (including the mortgage) and undertaking extensive renovations and maintenance.
More than six years after the wife announced that she wanted to separate, the husband filed for (and was granted) an extension of the deadline for his equalization claim.
The Position of the Parties
The husband claimed the routine maintenance that he performed in the home while living there, as well as the labour and cost of the improvements he made to the property (new windows, doors, bathroom renovations, etc).
The wife claimed occupation rent.
The Law on Occupation Rent
Occupation rent is a discretionary remedy that the court can order in exceptional circumstances. Previous decisions have set out the factors that a court should consider when exercising its discretion. These include:
- The timing of the claim for occupation rent.
- The duration of the occupancy.
- The conduct of the non-occupying spouse, including the failure to pay support.
- The conduct of the occupying spouse, including the failure to pay support.
- Delay in making the claim.
- 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.
The onus (i.e. responsibility) of establishing these factors is on the spouse seeking occupation rent. That spouse must also provide specific evidence as to what the market rent for the home would have been.
In making her final decision, Justice Donohue noted that the parties had organized their lives and finances following their separation without considering the claims they ultimately made against one another. Neither of them had contemplated that the husband would eventually seek half his expenses in the home, or that the wife would eventually seek occupation rent.
Justice Donohue noted that she was not persuaded that an award for occupation rent would be appropriate in the circumstances of this case because:
- The wife had not been compelled to leave the matrimonial home, she left by choice because she did not like it;
- The matrimonial home had benefitted the parties’ daughter, providing her with a part-time, full-time, or summer-time home (depending on what was going on in her life/whether she was away at university, etc);
- Although the husband had been entitled to claim child support, he did not do so until 2016 as he believed he and his wife had made “various trade-offs” on other things;
- Although the husband had the advantage of living in the matrimonial home, he had also funded (on his own) seven years of mortgage, taxes, and insurance and had put his own time and labour into preserving the property;
- Had the parties equalized their net family property and transferred title at separation, then the wife would not have received any equity from the home. It could not be said that she had been deprived the use of her equity in the home over the last seven years. However, the husband, on the other hand, created the equity that she could now enjoy;
- The husband’s efforts have improved the value of the property and preserved the property;
- The husband invested his time and money and occupied the home while not being aware that an occupation claim could or would be claimed. He relied on the parties’ early understanding that the house would be his.
Justice Donohue denied the wife’s claim for occupation rent. She also denied the husband’s claim for maintenance and improvements since he had done the work for himself as occupier of the home.
Perhaps the biggest take-away here is that a non-resident spouse is not permitted to sit on a claim for occupation rent, waiting years to exercise this option at a time when he/she would receive greater proceeds.
In this case, the wife’s share of the equity in the home at the time of separation would have roughly matched the equalization payment she owed the husband, so she would not have received her half of the equity had the title been transferred to him at the time. Since that time, substantial equity had built up due to the improvements to the property done by the husband. It was only after that time that she filed her claim.
If you have questions about determining the date of separation, or about valuation of your property and other assets, contact Financial Litigation.
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