Who Gets the Cottage? Dividing Vacation Properties in Ontario Divorces

A gray cottage on a rocky point surrounded by autumn trees with dark clouds above and gray water stretched out before it, representing the family cottage during divorce.

Written on behalf of Shariff & Associates

For many Ontario families, the cottage is more than just real estate; it is a cherished place of escape, memory-making, and legacy. But when a marriage breaks down, this beloved second property can become a point of contention. Who gets the cottage in a divorce? Can it be sold or transferred? What if it was inherited or owned before the marriage?

These questions are often complex and emotionally charged. In Ontario, the division of property during divorce is governed by the Family Law Act, which provides general rules for equalizing property acquired during the marriage. However, vacation homes present some unique legal and practical challenges that separating spouses should understand.

Understanding Property Division in Ontario Divorce Law

Ontario’s matrimonial property regime is based on the concept of equalization, not equal division. When married spouses divorce, each spouse calculates their “net family property”, which is the increase in their net worth during the marriage. The spouse with the higher net family property generally pays half the difference to the other.

The matrimonial home, defined as the couple’s primary residence, is subject to special treatment. Regardless of how it was acquired or who holds title, both spouses have an equal right to possess it upon separation, and its value is included fully in equalization calculations.

However, vacation properties like cottages are not typically considered matrimonial homes unless the family has established them as such by living there regularly or designating them as a primary residence.

Is the Cottage a Matrimonial Home?

The first and most important question in assessing what happens to a cottage is whether it qualifies as a “matrimonial home” under Ontario law.

A matrimonial home is any property that the spouses ordinarily occupied as their family residence at the time of separation. In some cases, couples may have two matrimonial homes: for instance, a primary residence in Toronto and a seasonal home in Muskoka, if the family regularly used both.

If the cottage is deemed a matrimonial home, it is subject to special legal treatment:

  • Both spouses have an equal right to possession after separation, regardless of ownership;
  • The full value of the cottage is included in the owner’s net family property without deducting any pre-marriage value or inheritance exclusion; and
  • One spouse cannot unilaterally sell or mortgage it without the other’s consent or a court order.

If the cottage is not a matrimonial home, it is treated as any other asset, and its value is included in the owning spouse’s net family property, with possible deductions for pre-marriage ownership or inheritance.

When One Spouse Owned the Cottage Before Marriage

A typical scenario is when one spouse owns the cottage before the marriage. If the cottage is not a matrimonial home, the owner spouse may be able to deduct its value as of the date of marriage from their net family property calculation. This can reduce or even eliminate the amount that is equalized.

However, if the cottage becomes a matrimonial home (for example, the couple regularly uses it as a family retreat), then the pre-marriage deduction is lost. The entire value of the cottage, including appreciation, is included in the net family property without any offset.

This distinction has significant financial consequences, and how a property is used during the marriage often determines how it will be treated during the divorce.

What If the Cottage Was Inherited?

Under Ontario’s Family Law Act, gifts and inheritances received during the marriage are excluded from the net family property, unless they are used to purchase or improve a matrimonial home. So, if one spouse inherits a cottage and keeps it solely in their name and does not treat it as a matrimonial home, its value may be excluded from equalization.

However, if the couple used the inherited cottage as a regular family residence, it may again be classified as a matrimonial home, and the inheritance exclusion no longer applies. The entire value of the cottage, including any increase in value during the marriage, would be included in the equalization calculation.

This is why legal advice at the time of inheritance is so crucial. Using an inherited cottage as a shared family property can have unintended consequences in the event of a divorce.

Joint Ownership and Contributions

In some cases, both spouses may jointly own the cottage, either from the outset or through a later transfer. Joint ownership generally implies equal rights to the property, and the cottage may be sold and proceeds divided equally unless one party can demonstrate unequal contributions or other factors.

However, joint title does not necessarily determine who gets the cottage. The court may examine:

  • Who contributed financially to the purchase, maintenance, and improvement of the property;
  • Whether there was an agreement (written or verbal) about ownership shares; and
  • Whether one spouse used separate funds (e.g., inheritance) to acquire the property.

If the cottage was not jointly owned but the non-owner spouse made significant contributions (such as paying for renovations or property taxes), that spouse may bring a claim for unjust enrichment or a constructive trust. These equitable remedies can result in a share of the property or compensation, even if legal title is in the other spouse’s name.

Practical Solutions: Selling, Buying Out, or Co-Owning

Dividing a vacation property in a divorce is rarely as simple as just assigning it to one spouse. Cottages are often emotionally and financially significant, and there may be sentimental attachments on both sides. Some of the common outcomes include:

One Spouse Buys Out the Other

If one spouse wishes to keep the cottage, they may compensate the other for their share of the equity. This usually requires a professional appraisal and may involve refinancing or liquidating other assets.

The Cottage Is Sold and Proceeds Divided

If neither spouse can afford to keep the property or they cannot agree on its division, the court may order the cottage to be sold. The proceeds are then split, often according to each party’s interest or as part of the broader equalization settlement.

Post-Divorce Co-Ownership

While rare and often problematic, some ex-spouses agree to continue co-owning a cottage, particularly where children are involved. This arrangement requires a detailed co-ownership agreement covering use, maintenance, expenses, and exit strategies.

Offsetting With Other Assets

In some cases, the spouse who wants to keep the cottage may agree to give up other property—such as their share of the matrimonial home or RRSPs—in exchange.

Each of these options has pros and cons and should be carefully evaluated in the context of the whole financial picture and long-term goals.

Children, Parenting Time, and the Cottage

The presence of children can further complicate matters. Sometimes, courts or separating parents may consider the value of continuity and emotional security that the cottage offers children. In rare cases, agreements may be reached for the cottage to be used jointly for the benefit of the children during parenting time (access) periods.

However, shared use of a cottage post-separation requires a high level of cooperation and clear rules. If communication between the parents is strained, such arrangements may become unworkable.

Preventing Disputes With Clear Agreements

As with many family law issues, proactive planning can help avoid costly and emotionally draining disputes. Some steps that may help include:

Marriage Contracts (Prenuptial Agreements)

Marriage contracts (sometimes called “prenuptial agreements”) can set out how the cottage will be treated in the event of separation, including ownership rights, exclusions, and buyout mechanisms.

Cohabitation Agreements

For common-law couples, property rights do not follow the same rules as married spouses. A cohabitation agreement can outline intentions around ownership and contributions.

Wills & Estate Planning

If the cottage is inherited or held through a trust, proper estate planning can help clarify intentions and minimize confusion about how the property is to be treated.

Even after separation, a separation agreement can address the cottage specifically, setting out who will retain ownership, how the property will be appraised, and what process will be used to resolve disagreements.

Finding a Fair Future for the Family Cottage

Dividing a cottage in an Ontario divorce is rarely straightforward. While the Family Law Act provides the framework for equalization, real-life circumstances—inheritance, joint ownership, emotional attachment, and children’s interests—often complicate the picture. Whether the cottage represents family tradition or financial investment, both spouses deserve clarity, fairness, and a path forward.

With skilled legal guidance and thoughtful planning, it’s possible to reach an outcome that respects the cottage’s importance while safeguarding each party’s rights during one of life’s most difficult transitions.

Contact Shariff & Associates for Pragmatic Family Property Division Advice in Markham Stouffville

Dividing a cottage during divorce can raise complex legal, financial, and emotional issues that standard property rules do not always resolve neatly. If you are separating and unsure how a vacation property will be treated, Shariff & Associates can help you understand your rights, assess your options, and work toward a practical resolution. Consulting with our experienced family lawyers can reduce conflict, protect your interests, and help you take a more efficient path forward. To discuss your family or divorce matter, please contact us online or call 905-591-4545.