Property Terms in an Ontario Separation Agreement

Separating usually means sorting out who gets what. A separation agreement lets you and your spouse decide this yourselves instead of leaving it to a court.

The property terms matter most. This article explains what those terms can cover, how equalization and the family home fit in, and what makes an agreement less likely to be challenged later.

What a separation agreement can say about property

Two people who lived together and are now living separate and apart may make an agreement about their rights and obligations, including ownership in or division of property. Where a separation agreement deals with something the Family Law Act also covers, the agreement prevails, unless the Act provides otherwise.

That gives you real room to design the deal. You can follow the statutory approach, or you can agree on something different, and your agreement will generally govern.

Start with the equalization baseline

Knowing the default rule helps you judge whether a proposed deal is fair. When spouses separate with no reasonable prospect of resuming cohabitation, the spouse with the lower net family property is entitled to one-half the difference between the two net family properties. Equalization is a payment of money, not a split of each asset.

Net family property is the value of what a spouse owns on the valuation date, minus excluded property, minus debts and liabilities, and minus the net value of property (other than a matrimonial home) owned on the date of marriage. If a spouse's figure is below zero, it is treated as zero.

Common-law partners are different. They are not entitled to equalization, and property generally belongs to whoever bought it. Their agreements still matter, but the starting point is not the same.

Terms worth addressing

• Whether an equalization payment is owed, how much, and when it is paid, including instalments.
• Who keeps which assets, such as the home, vehicles, investments and business interests.
• How pensions are treated, noting that the family law value of a pension covers the period from the date of marriage to the valuation date.
• How debts such as mortgages, loans and lines of credit are shared, since debts reduce net family property.
• Whether either spouse releases their matrimonial home rights, which can allow a later sale or mortgage without that spouse's consent.

The matrimonial home deserves care. Both spouses have an equal right to possession whoever holds title. No spouse may sell or mortgage it unless the other spouse joins in or consents, the other spouse has released their rights by separation agreement, a court authorizes it, or another property has been properly designated as the matrimonial home.

Making the agreement hold up

A domestic contract, and any agreement to amend or rescind it, is unenforceable unless it is in writing, signed by the parties and witnessed. The Ontario government also advises that each partner use a different lawyer and that the partners exchange financial information before signing.

A court may set aside a domestic contract or a provision in it if a party failed to disclose significant assets or significant debts that existed when it was made, if a party did not understand its nature or consequences, or on ordinary contract grounds such as duress, undue influence, misrepresentation or unconscionability.

Children's matters are treated differently. A court may disregard a contract provision on decision-making responsibility or parenting time where that is in the child's best interests, and may disregard an unreasonable child support provision.

What to do next

• List all assets and debts on both sides, with values as of the valuation date.
• Gather statements, pension information and property documents, and exchange them with your spouse.
• Decide what you want to do with the home and any other property.
• Have the agreement reviewed by a lawyer before signing, ideally separate lawyers for each of you.
• Sign in writing with a witness, and keep a complete copy.

Every situation differs, so a lawyer can confirm how these rules apply to your property, especially for businesses, pensions and inherited assets.

Frequently asked questions