Wife’s Net Family Property Calculation Affected by Property Ownership Dispute

Row of houses represent property ownership and equalization disputes in Ontario

Written on behalf of Shariff & Associates

Divorce can be a financial minefield, and property division often sits at the heart of this complex landscape. In Ontario, matrimonial property is divided between parties with the aim of a fair and equitable outcome. However, things can become complicated when it is unclear whether a spouse holds an interest in a particular property.

This blog post will explore the challenges of family property calculations, particularly when it comes to unclear ownership between spouses and family members and will consider how this issue was addressed in a recent case from the Ontario Superior Court of Justice.

Net Family Property Valuations in Ontario

Ontario’s Family Law Act outlines the legal framework for property division between spouses upon the breakdown of a marriage. Subject to certain exceptions, each party is entitled to an equal value of the family property upon separation. Therefore, calculating each party’s net family property can become complicated, particularly in cases involving high net-worth separations, hidden assets, complex trusts, and property ownership disputes. As such, both spouses must provide full and frank disclosure of all property, financial assets, and liabilities to ensure that fair and accurate calculations are reached.

Property calculations are determined based on the total value of each party’s property, including assets and liabilities, as of the date of separation. After each spouse’s net family property has been calculated, the spouse with the greater property value will owe the other an equalization payment, which is equal to one half of the difference between the two calculations. For these reasons, working with a family law lawyer who can help you determine property valuation, resolve ownership disputes and calculate any equalization payment owing is beneficial. In certain cases, additional experts, such as business valuators and forensic accountants may also be retained in order to ensure all property values and assets are fully accounted for.

Should Property be Included in Wife’s Family Property Calculation?

In the case of Afatmirni v. Sharifi, the parties were married in January 2021 and separated in October 2022. The parties began cohabitating in April 2020 and continued to reside together, separate and apart, in the matrimonial home until January 2023 when the husband moved out and the wife remained in the home.

The husband owned the matrimonial home, which he purchased shortly before the parties married. At issue before the Ontario Superior Court of Justice was whether a different property – which was a mixed-use condominium (the “condo”) – should be included in the wife’s net family property calculation.

Husband Says Property Should be Included in Wife’s Family Property Calculation

The condo was initially purchased by the wife’s mother, (“RS”) in 2014, although the purchase was later assigned to the wife, who took title upon closing. The condo was later sold with net proceeds in excess of $340,000 deposited into the wife’s bank account. These funds were subsequently used to purchase a cottage property which was owned by RS.

The husband sought for the condo to be fully included in the wife’s net family property calculation. He also argued that the equity should be assessed at zero at the date of marriage and all net proceeds should be part of the wife’s assets. On the other hand, the wife argued that she simply held the property in trust for her mother and, as such, it should be completely excluded from her net family property.

Wife and Mother Both Hold Interest in Property

When the matter was before the Court, many facts were undisputed by the parties. For instance, the parties agreed that RS’s initial purchase agreement was later amended and assigned to the wife and that RS “made significant deposit payments.” However, the issue of whether RS retained a beneficial interest in the property was still in dispute.

Upon consideration, the Court determined that both RS and the wife had contributed to the acquisition of the property, although there were discrepancies and credibility issues in the parties’ testimonies pertaining to the property’s use and mortgage payments. While RS made large down payments on the property, even after the purchase agreement assignment, the wife paid the mortgage along with other expenses. It was also determined that RS continued to be jointly and severally liable under the assigned contract and that it was unclear whether the deposit payments made by RS were “intended to be a loan to the wife, or a gift.” Accordingly, the Court found RS to have retained a 64 percent beneficial interest in the property, with the wife holding a 36 percent interest.

Property Included in Wife’s Family Property Calculation

Based on this determination, the Court then calculated the wife’s share of the property at the date of marriage and at the date of separation. Therefore, her 36 percent interest in the property was valued at $105,182.29 at the date of marriage, and $123,059.50 at the date of the parties’ separation. These amounts were subsequently included in the wife’s family property calculation for the purposes of equalization.

Contact Shariff & Associates for Skilled Representation in Property Division and Equalization Disputes

At Shariff & Associates, our trusted team of family and property lawyers assist clients with various issues arising out of separation and divorce, including complex property division and equalization disputes. Located in Stouffville, our lawyers assist clients throughout Markham and the Greater Toronto Area, including Ajax, Brooklyn, Aurora, Newmarket, Uxbridge, Whitby, Oshawa, Mount Albert, Ballantrae, and Zephyr. To learn how we can help you resolve your property division dispute, reach out to us online or contact us by phone at 905-591-4545.