CAN A NON-TITLED SPOUSE SHARE IN THE VALUE OF A MATRIMONIAL HOME BEYOND THE VALUATION DATE

The best-case scenario for spouses sharing in the value of a matrimonial home in a divorce proceeding is for both parties to be on title. This would mean that the property was registered in the name of both parties when it was purchased.

Oftentimes however, for a variety of reasons, spouses, either at the time of purchase or subsequently, choose to register matrimonial property in the name of only one of the spouses. At the breakdown of the marriage, the conventional wisdom is that, for equalization, a spouse who is not on title can only share in the value of a former matrimonial home as at the date of valuation. This means that the non-titled spouse will be deprived of the increase in the value of the matrimonial property from the date of separation to the date of the sharing of matrimonial property between the parties. The non-titled spouse will also have difficulty maintaining possessory claims over the property.

There are however exceptions to the above-noted conventional wisdom. For these exceptions, lawyers generally look to the application of constructive trust and unjust enrichment to enhance the position of the non-titled spouse. In this article however, I would like to highlight the doctrine of resulting trust that could be particularly available to spouses who contributed to the purchase of the matrimonial property. The Supreme Court of Canada in Kerr v Baranow 2011 SCC 10 at paragraph17 outlined two particular situations where the doctrine of resulting trust has been traditionally applied in matrimonial matters as follows:

Resulting trusts arising from gratuitous transfers are the ones relevant to domestic situations.  The traditional view was they arose in two types of situations:  the gratuitous transfer of property from one partner to the other, and the joint contribution by two partners to the acquisition of property, title to which is in the name of only one of them.  In either case, the transfer is gratuitous, in the first case because there was no consideration for the transfer of the property, and in the second case because there was no consideration for the contribution to the acquisition of the property.   

Accordingly, where a spouse transfers property that was in his name to the name of the other spouse as the sole owner, that spouse may be able to maintain a resulting trust claim. As well, where a couple jointly acquire property but register it in the name of one of them, the party who is not named on the title, may be able to maintain a resulting trust claim. Where such a claim succeeds, the non-titled party will be able to share in the value of the property as a beneficial owner as though he or she were on title.

While the doctrine of unjust enrichment and constructive trust remain the more widely used doctrines for untitled partners, resulting trust has a peculiar advantage in that section 14 of the Family law Act imposes a presumption that the party whose name is on title must rebut or displace in order to prevent the party whose name is not on title from sharing in the value of the property as though her name were on title. The Court of Appeal for Ontario made this very clear in Korman and Korman 2015 ONCA 578 at paragraph 26 when it noted, “ Section 14 of the Act affirms the presumption of a resulting trust in determining questions of ownership between spouses in the context of gratuitous property transfers.  Where the presumption is invoked, the party resisting the imposition of a resulting trust is required to disprove the presumption that his or her spouse is the beneficial owner of an interest in the disputed property.”