By Valerie L. Brown of Brown Law Firm Professional Corporation
There are many separating spouses that are able to make decisions regarding their family’s future together in a timely and amicable manner. Some are able to do this cooperatively and without the assistance of lawyers or mediators. Others need some assistance. The result is a plan going forward which is usually incorporated into a Separation Agreement. Both spouses participate in the negotiation of the Agreements and retain control over the outcome.
However, when one or both spouses are unable to act reasonably, discuss issues, and work together to resolve those issues even with the assistance of lawyers and mediators (and even financial and family professionals,) it may be necessary to have a judge or arbitrator make decisions for them. This can significantly delay resolution of important issues, sometimes for years.
During the time it takes to resolve these issues, it is usually the case that one spouse will leave the home previously occupied by them as a family, known as the matrimonial home. After making the decision to separate, tensions often run high making continued cohabitation uncomfortable, and sometimes dangerous. This will especially be the case where children are exposed to adult conflict in the home, which can be extremely harmful to them, and in some cases may attract the involvement of the Children’s Aid Society. Therefore, as a practical matter, one spouse must leave the home. In some cases, a spouse acts unilaterally to exclude the other and there is no choice.
If the spouses own the home together, the spouse that leaves the home continues to have financial obligations towards the expenses incurred to preserve the home, being the mortgage, property taxes, insurance, and capital improvements. They will also have new financial obligations to their new residence either in the form of rent, or other mortgage payments. This too is impractical and often creates a financial hardship for the spouse who leaves the home until the property issues are resolved between the spouses.
It is in such situations that a spouse may be able to claim occupation rent. Occupation rent is rooted in the concept of fairness, or equity, and recognizes that a spouse’s financial interest in the home may be tied up due to the other spouse’s continued occupation of the home pending a resolution of the financial issues. Occupation rent is very much what it sounds like: financial compensation for the other spouse’s continued occupation of the home. The spouse making the claim must have an ownership interest in the property either established through title, or equity. It is not sufficient that the home be a matrimonial home. After all, one can’t argue that they are being deprived of their equity in the home, if they don’t have any equity to begin with.
Occupation rent often comes in a bundle with other claims, including spousal support, child support, and contribution to ongoing expenses of the home. Occupation rent cannot be considered in isolation of these issues, where claimed; it is a series of checks and balances of what is owed.
Most commonly, if the occupying spouse is required to pay occupation rent, this may be offset against the other spouse’s obligation to their share of the ongoing expenses for the home. Going further, if spousal support is owing to the spouse occupying the home, it may be that the net result is a payment to them.
Occupation rent is not an automatic right, but rather an exceptional remedy based on the specific circumstances of the case. While the facts to be considered are variable, the case law is clear that delay will be fatal to any claim for occupation rent. Therefore, it is advisable to bring the claim sooner rather than later.
In determining whether a situation will warrant occupation rent, the following principles have emerged:
Factors against occupation rent:
- If a spouse was removed from the home due to criminal charges arising from their own misconduct;
- If the vacating spouse has not paid support for the spouse or children since vacating the property;
- If the vacating spouse consented to the other spouse remaining in the home;
- If the vacating spouse left the property freely and voluntarily;
- If the vacating spouse has engaged in blameworthy conduct, including depleting assets and hiding assets;
- If the vacating spouse causes delay in selling the property, thereby creating the situation;
- If the occupying spouse has paid the expenses of the home and maintained it in a manner that increases the value of the home, and that increased value will be shared with the vacating spouse upon sale; and
- If the vacating spouse’s share of the expenses related to the house exceeds the amount they would receive as rent.
As you can see, there are ample reasons to deny a claim for spousal for occupation rent. So, when might a claim be successful?
Factors in Favour of Occupation Rent:
- If the occupying spouse is the one responsible for the delay in the sale of the property;
- if the occupation interferes with the non-occupying spouse’s ability to access their equity;
- if the vacating spouse pays support and their share of the ongoing expenses of the home;
- The longer the period of the occupancy, the more likely occupation rent will be.
However, in order to maintain a current interest in the property, the non-occupying spouse still has to meet their financial obligations to the home to pay their equal share of the basic cost of the home which are the mortgage, property tax, insurance, and capital improvements. The non-occupying spouse’s share of these expenses will be deducted from any occupation rent owing to them. This may result in a net payment, no payment, or potentially even an overpayment by the non-occupying spouse. Therefore, before bringing a claim for occupation rent you should be clear on what your obligations are, and not only be focused on what you might get.
Don’t Claim Occupation Rent “Just Because”
Claims for occupation rent are often brought as a reflex reaction to other financial claims such as spousal support and contribution to expenses of the home, and not based on any real merit to the claim. If your claim for occupation rent is a mere tactic, it will not likely be successful, and may ultimately cost you more in the form of legal costs payable to your spouse for the wasted time and effort defending the claim.
How is Occupation Rent Calculated
Once it is determined that occupation rent is appropriate, it will usually be calculated based on a percentage of the market rent. In the case of a jointly held property, both spouses would benefit equally from any market rent paid. It would be unfair to require the occupying spouse to pay 100% of market rent, when as an owner, they would be in receipt of 50% of that amount.
Think of a situation where the spouses use the home as a rental property to third parties. Therefore, where one spouse is occupying the home, the remaining 50% of the market rent would be appropriately paid to the non-occupying spouse as their share. In some cases where a child continues to occupy the home, the percentage has been adjusted to reflect that (i.e. rent was equally apportioned based on the number of people occupying the home, such that the parent and child in the home warranted payment of 2/3rds of the market rent, rather than 50%).
Know the Risks
It is perhaps because of the various competing claims and obligations that occupation rent is not claimed routinely, nor should it be. It is also worth commenting that the cost of taking such claims through to conclusion by way of a trial is a very expensive and uncertain undertaking. This remedy is one that is solely within the court’s discretion.
It is essential to consider the potential success of a claim, along with the certain cost involved in pursuing it. It is advisable for you to consult with a lawyer to better understand your chances of success with such a claim.