Who Pays the Mortgage After Separation in Ontario?

After a separation, a joint mortgage does not simply go away, because separation does not change your contract with the lender. Whether you live in the home or have moved out, it is natural to ask who has to keep paying and what happens if payments are missed.

The answer depends on your mortgage, your agreement or court order, and your circumstances. This article explains the main rules and the questions to raise early.

Your duty to the lender does not change

Each person who signs a mortgage as a joint borrower is equally responsible for repaying the unpaid balance. Separation does not change that contract with the lender.

In practice, this means a missed payment can affect both borrowers, whatever you have agreed between yourselves. Your lender is not normally a party to your separation agreement or court order, so what it will allow, such as removing a name or approving a refinance, is a separate question to confirm directly with the lender.

Who pays between the two of you

Between spouses, who pays what is usually settled by agreement or by court order. A separation agreement, like other domestic contracts, is unenforceable unless it is in writing, signed by the parties and witnessed. A court may set aside a domestic contract if a party failed to disclose significant assets, debts or other liabilities that existed when it was made.

If a spouse is given exclusive possession of the matrimonial home, the court may also order a spouse to pay for repairs and maintenance. When deciding possession, the court considers factors that include the children's best interests, the availability of other suitable and affordable housing, and any violence by a spouse against the other spouse or the children. How mortgage payments themselves are shared in a particular case depends on the facts.

Common situations

If the home is in one name only, the other spouse still has a right of possession, which is personal and ends when they stop being spouses unless an agreement or order says otherwise.

Keeping the home or selling it

A person may apply to court to decide a question of ownership or possession of particular property between them and their spouse. The court may declare ownership, order partition or sale, and order compensation if the property was disposed of.

If one spouse owes an equalization payment, the court may order payment and security for it. To avoid hardship, it may allow instalments or delayed payment for up to ten years, and it may order property transferred, partitioned or sold. A property order must not require the sale of an operating business or farm unless there is no reasonable alternative.

Transferring capital property such as a house to a spouse, or to a former spouse in settlement of rights arising from the relationship, rolls over at the transferor's adjusted cost base, so no capital gain is triggered at transfer unless the transferor elects out. This applies only if both people are resident in Canada at the time. A tax professional can confirm how it applies to you.

What to do next

• Pull your mortgage statements and note the payment amount, due date and borrowers.
• Confirm who is currently making payments, and keep proof of every payment.
• Add up property tax, insurance, utilities and repair costs so they can be discussed.
• Contact your lender early if payments may be missed.
• Ask a family lawyer whether an agreement or court order should deal with payment and the home's future.

If you worry that property is being depleted, a court may make orders restraining the depletion of a spouse's property in an equalization or title application.

Frequently asked questions