Family Cottage and Divorce in Ontario: Who Keeps It?

For many Ontario families the cottage is the place where the best memories were made, and it is often the asset people fight hardest to keep. If you are separating, you may be wondering whether your spouse can force a sale, whether an inheritance protects it, or whether it counts as your home in the legal sense.

The answer turns on two questions: how you came to own the cottage, and how the family used it. This article walks through the basic property-division rules, the special treatment of the family home, and practical steps to protect your position.

How property is divided when a marriage ends

Ontario uses an equalization approach for married spouses. Net family property is the value of what a spouse owns at the separation date, minus debts and excluded property, less the same net value at the date of marriage. If the result is negative, it counts as zero.

The spouse with the larger net family property pays half of the difference to the other spouse as an equalization payment. This is a payment, not an automatic transfer of each asset. That is why a cottage does not have to be sold just because it has value. It may be kept by one spouse, with the other receiving credit for its value in the calculation.

Unequal division is allowed only in very special situations where an equal division would be extremely unfair. You should not assume a court will depart from the usual rule.

Inherited, gifted or bought during the marriage

How you acquired the cottage is the first dividing line. Property inherited or gifted by someone other than your spouse during the marriage is excluded property, with the family home being the exception. The Court of Appeal has described the same rule as excluding property, other than a matrimonial home, acquired by gift or inheritance from a third person after the date of marriage.

A cottage that you bought during the marriage with family earnings is a different situation. It is not inherited or gifted, so it is generally part of what is valued at separation and counted in your net family property.

If inherited money was used to buy or improve a cottage, tracing becomes an issue. The Court of Appeal has addressed excluded property into which such funds can be traced. Keep records showing where the money came from.

When a cottage may count as the family home

The family home gets special treatment. Its full value is shared even if one spouse owned it before the marriage or received it as a gift or inheritance, unless the spouses agree otherwise. The legal term is matrimonial home.

Whether a seasonal property counts as the family home depends on the facts of how it was used. The test is fact-specific, so a lawyer can confirm how the rules apply to your cottage.

If a cottage is a matrimonial home, the spouse who does not own it may still have rights in it. A married person can ask the court to let them stay and require the other spouse to leave, even if the other spouse owns the home. The judge looks at past violence, whether there is another suitable place to live, the children's best interests and both parties' finances.

Ways to protect your position

• Agree in writing. Spouses can agree to exclude property from the calculation, and they can agree on how a family home is treated.
• Ask about a designation. Whether registering a designation of a matrimonial home on title makes sense for your cottage depends on your situation, so it is worth confirming with a lawyer.
• Be careful about what you try to register on title. What can properly be registered against a cottage depends on your situation, so it is worth confirming with a lawyer.
• Watch the deadline. An application for an equalization payment must be made within six years of separation or two years after the divorce is final, whichever comes first.

If you are the spouse who wants the cottage kept in the family, how that could work depends on your finances and the other assets involved, so it is worth confirming with a lawyer.

What to do next

• Gather the deed, purchase documents, estate or gift papers and any records showing where the purchase money came from.
• Note when and how often each spouse and the children used the cottage, and whether anyone lived there for extended periods.
• List the mortgage or loans on the cottage and their balances at the date of separation.
• Write down the date of separation, since values are fixed at that date.
• Avoid selling, transferring or borrowing against the cottage until you have advice.
• Speak with a family lawyer about whether the cottage is a matrimonial home, and whether an agreement or a designation makes sense.

If you and your spouse agree on the cottage, the agreement is generally written as Minutes of Settlement when it is reached in court. A lawyer can make sure the wording matches what you intended.

Frequently asked questions