Property

Ontario does not split each asset down the middle when a marriage ends. Instead, the spouse whose net worth grew more during the marriage pays the other half the difference (Family Law Act, s. 5(1)). Who keeps the family home, how pensions and businesses are valued, and how fast you must act are separate questions with their own rules.

This page is the starting point for property questions. It explains the process, the rules that most often change the result, and the mistakes we see people make in the first weeks after a separation. Each topic links to a longer guide, and our practice areas page shows how property fits with support, parenting and divorce.

Ontario calls the process equalization of net family property. It is a money calculation, not a list of who takes which item. Here is the usual order of events.

1. Find the valuation date. For most couples it is the date you separated with no reasonable prospect of getting back together. The Act lists four other possible dates and uses whichever comes first (s. 4(1)). Values are taken at close of business on that day (s. 4(4)). Our guide to choosing the valuation date explains why the date is so often contested.
2. List everything each spouse owned and owed on that date. Real estate, bank and investment accounts, RRSPs, vehicles, business interests and pensions all count, along with mortgages, lines of credit and tax owing. Contingent tax on an asset, such as tax that will be due when an RRSP is cashed, can be counted as a debt (s. 4(1.1)).
3. Deduct what each spouse brought into the marriage. The net value of property owned on the wedding day comes off, except for a home that is still the matrimonial home on the valuation date.
4. Remove excluded property. Seven kinds of property stay out of the count entirely, such as an inheritance received during the marriage (s. 4(2)). The spouse claiming an exclusion or deduction has to prove it (s. 4(3)).
5. Compare the two results. Each total is that spouse's net family property, and it can never be less than zero (s. 4(5)). The lower spouse is entitled to half the difference. The detailed arithmetic is on our page about calculating net family property.
6. Decide how the payment is made. A court can order a lump sum, security on property, a transfer of specific assets or, in some cases, instalments (s. 9(1)). Most couples settle the payment in a signed separation agreement instead.

Every step depends on paperwork. In a court case each spouse files a sworn financial statement listing property and debts on the wedding day and the valuation date (s. 8), and our guide to financial disclosure in a property case lists the documents that must go with it. Agreements reached out of court are only enforceable if they are in writing, signed by both spouses and witnessed (s. 55(1)).

If the case does go to court, it belongs in the Superior Court of Justice. The Act's definition of "court" for property claims leaves out the Ontario Court of Justice (s. 4(1)), so in Toronto a property claim is heard at the Superior Court of Justice family court on University Avenue.

• You were not married. Equalization applies only to spouses as the Act defines them in section 1(1). A common-law partner, even after many years together, has no equalization claim. Property stays with the person who owns it unless a court finds a trust or unjust enrichment. Our guide to unjust enrichment claims for common-law partners covers that route.
• The family home was owned before the wedding. Normally the wedding-day value of property is deducted. A matrimonial home is the exception: if it is still the family home on the valuation date, no deduction is allowed and its full value counts. Gifts and inheritances also lose their exclusion if they went into the matrimonial home (s. 4(2), paras. 1 and 5). Our page on the matrimonial home walks through this rule.
• There is a marriage contract or separation agreement. Property that a valid domestic contract excludes stays out of the calculation (s. 4(2), para. 6). A court can set a contract aside if a spouse hid significant assets or debts, did not understand the contract, or on ordinary contract law grounds (s. 56(4)). See when an agreement can be set aside.
• Equal sharing would be unconscionable. A judge may award more or less than half the difference, but only on the grounds listed in section 5(6), such as hidden debts, reckless debts, intentional depletion, or a payment out of proportion to a marriage of under five years. Our guide to unequal division of property explains how high that bar sits.
• One spouse has a pension or a business. Pensions are valued for the period of the marriage and transferred under the Pension Benefits Act. A business has no set formula and usually needs a valuation. See our guide to dividing pensions on separation. For a company or practice, read about a business owned by one spouse.
• There are significant debts. Debts on the valuation date reduce the spouse's net family property, and so can a negative wedding-day balance. Our guide to how debts are handled sets out the details.
• A spouse dies. The surviving spouse can choose equalization instead of what the will or intestacy gives them, but the election has a six-month window (s. 5(2), s. 7(3)(c)). See property division when a spouse dies.
• Property is being drained. If there is a serious danger that a spouse will deplete their property, a claim can be made even while you still live together (s. 5(3)), and a court can restrain the depletion of property during a case (s. 12).

For example, imagine a hypothetical couple, Sam and Riya, who separate after ten years of marriage. Sam owned a condo before the wedding and they lived there as a family until the day they separated, when it was worth $600,000 with a $250,000 mortgage. Sam also has $90,000 in an RRSP. Riya brought $40,000 in savings into the marriage and now has $110,000 in savings and a car worth $20,000. During the marriage Riya inherited $60,000 from a parent and kept it in a separate account.

Sam's net family property is $350,000 in home equity plus $90,000 in RRSPs, less an estimated $20,000 of tax on the RRSP: $420,000. Sam gets no deduction for the condo's wedding-day value, because it is still the matrimonial home. Riya's figure is $130,000 in savings and car, less the $40,000 brought in, with the inheritance left out: $90,000. The difference is $330,000, so Sam owes Riya an equalization payment of $165,000.

Now change one fact. Suppose Riya had used the $60,000 inheritance to pay down the condo mortgage. Money put into a matrimonial home is no longer excluded, so the inheritance would simply become part of Sam's home equity. Sam's figure would rise to $480,000, the payment to Riya would rise to $195,000, and Riya would be $30,000 worse off than if the money had stayed in a separate account. Small facts like this move the result by tens of thousands of dollars, which is why the order of the steps above matters.

The numbers are invented and leave out costs such as selling fees. They show how the rules interact, not what any court would order.

• Assuming everything is split 50/50. Ontario divides growth, not items. A spouse can keep the house and still owe, or be owed, a large payment.
• Moving out and assuming the home is lost. Leaving does not end a spouse's equal right to possession or the home's status as a matrimonial home (s. 18(1), s. 19(1)). Our page on exclusive possession explains when a court will order one spouse out.
• Mixing an inheritance into the family home or joint accounts. Once excluded money is used for the matrimonial home, the exclusion is gone, and tracing it through other accounts takes records many people no longer have.
• Waiting too long. The six-year and two-year limits in section 7(3) run whether or not anyone is talking. Our guide to the deadline to claim equalization shows how they are counted.
• Signing a "kitchen table" agreement without full disclosure. An agreement made without disclosure of significant assets or debts can be set aside later (s. 56(4)(a)), which helps nobody.
• Selling or mortgaging the home without consent. A spouse cannot dispose of or encumber a matrimonial home without the other spouse's consent or a court order (s. 21(1)). See selling or mortgaging the home.

1. Write down the date you separated and what happened that day. It may become your valuation date.
2. Collect statements for every account, loan and investment as close as you can to the separation date and the wedding date.
3. Find proof of any gift or inheritance received during the marriage, and where that money went.
4. Ask your pension plan administrator about a family law value statement if either of you belongs to an Ontario plan.
5. Do not sell, mortgage or move large amounts of property without written agreement.
6. Diarize the earliest possible deadline under section 7(3).
7. Book a consultation before signing anything, so the agreement reflects the full picture.

We believe in clarity, fairness and efficiency when handling property matters. That starts with a clear picture of your financial situation and of the assets you are entitled to protect. From there we give practical advice aimed at keeping conflict and legal costs down, and we work toward negotiated settlements wherever we can. When a case needs a judge, we are prepared to advocate for you in court. Property work is led by our principal lawyer, Trevor Smith. You can also meet the rest of our team.

We also help with the questions that sit next to property. Child and spousal support often depends on the same financial records. A divorce can start the two-year property deadline running. To understand what drives the cost of a property case, read our guide before your first meeting.

Does the person whose name is on the house keep it?

Not automatically. Ownership decides who holds title, but both spouses have an equal right to live in a matrimonial home (s. 19(1)), and its value goes into the equalization calculation whoever owns it. Who stays, and whether one spouse buys the other out, is usually settled in the agreement or by court order.

Are RRSPs and TFSAs divided?

They are counted as property on the valuation date, less what was held on the wedding day. Tax that will be due when an RRSP is cashed can be treated as a liability (s. 4(1.1)). How a registered account is actually transferred is usually spelled out in the separation agreement or order.

Is an inheritance always protected?

An inheritance received after the wedding is excluded, along with property it can be traced into (s. 4(2), paras. 1 and 5). The protection is lost if the money went into the matrimonial home. An inheritance received before the marriage is treated as wedding-day property and deducted instead. Our guide to excluded property covers both cases.

Do debts get shared?

Debts are not split item by item. Each spouse's debts on the valuation date reduce their own net family property, which in turn changes the equalization payment. A lender is not bound by your agreement, so a joint loan usually needs to be refinanced or paid off.

Can we divide property without going to court?

Yes. Most couples exchange disclosure and sign a separation agreement. In a divorce case, the Divorce Act asks the parties to try a family dispute resolution process such as negotiation or mediation where that is appropriate (s. 7.3). The agreement must be in writing, signed and witnessed to be enforceable (s. 55(1)).

What if my spouse hides assets?

In a court case, each spouse must file a sworn statement of property and debts (s. 8), and a court can order more disclosure. A failure to disclose debts at the date of marriage is one of the grounds for an unequal division (s. 5(6)(a)), and hidden assets can undo a settlement under section 56(4).

Does it matter who earned more or who stayed home?

No. The Act treats child care, household management and earning money as joint responsibilities (s. 5(7)), so equalization shares the gain regardless of whose paycheque paid for it.

We serve families across Toronto from our office at 401 Bay Street. Our Toronto family court guide explains which court hears which case. Divorce and property cases are heard at the Superior Court of Justice family court on University Avenue. Support and parenting cases can also be heard at the Ontario Court of Justice family courts at 47 Sheppard and 311 Jarvis.