How is Property Divided in a Divorce in Canada?

Question from Shan, How is Property Divided in a Divorce in Canada?

Answer from AI:

In Canada, the division of property in a divorce is generally based on the concept of equalization or equal division of the “net family property” (NFP). This includes the value of all assets that each spouse accumulated during the marriage, minus any debts and liabilities.

Calculating Net Family Property

To calculate the NFP, you would:

1. Calculate the value of all assets each spouse owned at the date of separation.
2. Subtract the value of all debts and liabilities each spouse had at the date of separation.
3. Subtract the value of any assets each spouse brought into the marriage (except the matrimonial home).

In your case, if the house is worth $800,000 and you’ve paid $170,000 on a $500,000 mortgage, the equity in the home is $470,000 ($800,000 – $500,000 + $170,000). This equity would be part of your NFP.

Equalization Payment

The spouse with the higher NFP usually makes an “equalization payment” to the other spouse, which is half the difference between the two NFPs. This is to ensure that both spouses share equally in the financial benefits of the marriage.

Does This Mean My Ex-Spouse Gets Half of the House?

Not necessarily. The equalization payment does not mean that each asset is split 50/50. Instead, it’s the total value of all assets that’s divided. So, your ex-spouse might not get half of the house, but they could get other assets that equal half the value of the NFP.

What If We Can’t Agree on the Value of the House?

If you and your ex-spouse can’t agree on the value of the house, you might need to get a professional appraisal. If you still can’t agree, a court might have to decide.

What If There Are Other Factors?

In some cases, a court might order an unequal division of property if an equal division would be “unconscionable” (extremely unfair). This could happen if, for example, one spouse ran up huge debts for non-family purposes or deliberately wasted family assets.

Remember, this is a general explanation. The laws can be complex and there may be other factors that could affect the division of property in a divorce. You should consult with a legal professional for personalized advice.

For more information, you can refer to the Ontario Ministry of the Attorney General’s guide on property and divorce or the Department of Justice’s guide on divorce law in Canada.