Introduction
As I reach my 30th year of practice, some of the hardest battles I have fought are the urban legends that people hear from friends, family, social media or just popular culture. Ideas like “if I have my kids 40% of the time, I don’t have to pay child support,” or “ married and common law spouses have the exact same rights,” haunt the legal landscape of the ill-informed. One of the more common beliefs that I must often dispel from my clients is the belief that, if they stay in the house, they somehow “win” the case. “Never leave the house voluntarily,” is what they tell me they have been told by friends and family, but not understanding why that is the case.
In some cases, it is a good idea to remain in the house, but that’s a blog for another day. This blog is about what happens when a client “supposedly wins” the issue of remaining in the house, but then is faced with defending a claim for occupation rent. Every client asks me the same question: “What is occupation rent? And why would I have to pay my ex any rent? They don’t even live here anymore!” Let me explain it to you, and I will warn you now: you may need to read the blog a few times to try and understand the concept (I know there are some lawyers who still don’t have a firm grasp of the idea, either, so I hope this helps them, as well).
What Is Occupation Rent?
A claim for occupation rent may arise when spouses separate and one spouse enjoys exclusive possession of the matrimonial home, even though the home is jointly owned. If one spouse has left the matrimonial home (including, but not limited to, where the party was granted an exclusive possession order was made), the spouse who remains in the matrimonial home may be required to pay the spouse who is not in the home “a sum of money” because the spouse who remains in the matrimonial home now has exclusive use of the home. The sum of money is occupation rent.
Who Can Claim Occupation Rent?
It depends. I set this out in greater detail below, but generally speaking, you must be a co-owner of the home with the other party. Under the provincial family law legislation, it is restricted to married spouses, but there are others laws (both statute and case law) that provide for a non-married spouse to make a claim for occupation rent.
How Can Occupation Rent Be Granted?
There are three ways for a person to claim occupation rent:
- Section 24(1)(c) of the Family Law Act, if one spouse has an order for exclusive possession, the court may direct a spouse who has exclusive possession make “periodic payments” to the spouse who does not have exclusive possession (the periodic payment is the occupation rent). Under this section, only married spouses can make a claim for an order for exclusive possession and, thus, only a married spouse fits within this definition of spouse.
- Section 122(2) of the Courts of Justice Act also grants the court the jurisdiction to award occupation rent in situations where there has not been an order for exclusive possession granted. The section provides that an action for an accounting may be brought by a joint tenant or a tenant in common, or their personal representative, against a co-tenant for receiving more than the co-tenant’s just share.
- At common-law, if there is no order for exclusive possession, the court has the power to order occupation rent. All joint tenants have an equal right to the occupation of the whole of the premises, and neither has the right to exclude the other. A tenant-in-possession has an obligation to account for rents and profits from property to a co-tenant who is not in possession, which is imposed by the courts of equity in a suit for partition and sale.
What Must the Court Consider to Award Occupation Rent?
It will be up to the court that hears the motion or trial of the matter to determine the weight to be given to each of the factors listed below. Usually, this is done at trial, to allow all the factors necessary to be ascertainable.
It is important to understand that a court will not automatically make an order for occupation rent. Rather, it is a tool for the court to achieve justice in the circumstances of the case, and it is only awarded when it is reasonable and equitable to do so. Consequently, there are a variety of factors to be considered when assessing claims for occupation rent. These are as follows:
- The conduct of the non-occupying spouse including the failure to pay support;
- The conduct of the occupying spouse including the failure to pay support;
- Delay in making the claim;
- The extent to which the non-occupying spouse was prevented from having access to his or her equity in the home;
- Whether or not the non-occupying spouse moved for the sale of the home and, if not, why not;
- Whether the occupying spouse paid the mortgage and other carrying charges of the matrimonial home;
- Whether the children resided with the occupying spouse and, if so, whether the non-occupying spouse paid, or was able to pay, child support; and
- Whether the occupying spouse increased the selling value of the property.
In determining whether occupation rent is appropriate, the court must consider the total financial context of the parties. As well, there are other adjustments or credits that must be taken into account when an award of occupation rent is calculated.
Calculating The Amount of Occupation Rent to Be Awarded
Once the basis for occupation rent is established, the court must then attribute a monetary figure to the award. Usually, an award for occupation rent represents one-half of the rent that could have been earned had neither spouse lived in the matrimonial home, less any applicable post-separation credits or adjustments.
It is therefore critically important that each spouse should get an expert opinion from a realtor familiar with the monthly market rental income of the matrimonial home, either to support, or oppose, a claim for occupation rent.
Other adjustments or credits to be considered when calculating an award of occupation rent may include the following expenses paid by a spouse during the period of their possession:
- mortgage payments made in whole by one of the spouses;
- property taxes and insurance;
- lasting home improvements; and
- necessary home repairs.
The spouse who seeks a credit should be prepared to provide evidence of their payment of an expense, e.g. invoices, receipts, bank statements, and bill details.
An Illustration
For the purposes of showing how a claim for occupation may work, I will use the following illustration with fictional details:
John and Jane Doe were married from 2011 to 2021. They are the co-owners of the matrimonial home located at 123 Main Street East, Anywhere, Ontario. They left when Jane’s mental health issues were made worse during the Covid-19 pandemic and their opposite views on whether to get the vaccine or not.
Six months after they separated in January 2021, Jane applied for, and was granted, exclusive possession of the matrimonial home. John was happy to leave, as Jane made it unbearable living there, having regular outbursts of anger, unprovable accusations of infidelity, and veiled threats that “she knew people” who could resolve their dispute quickly.
In his Claim by Respondent to Jane’s Application, John made a claim for, amongst other relief, occupation rent. He was fine to pay her spousal support as he had been the major breadwinner – he was a principal, and Jane was an administrative assistant at the local dentist’s office.
As John was a bit of “pack rat,” he had to hire movers to help him take away all of his stuff. He was originally going to ask his friends to help him move, but Jane would not allow this as she blames them for John deciding the marriage was over. She would not even let them step on the driveway for fear she would cause a scene or call the police.
While Jane was in the home and John was out, they did agree that they would share the household bills (there was no mortgage – only taxes, insurance and utilities).
After speaking with his lawyer, John secured the services of a local relator who advised that, if the parties had put up the house for rent after they separated, they would have received $2,500.00 per month for the 12 months that John was out of the house before the matter reached the trial stage. Jane also had a lawyer who told her to get a realtor, but she failed to do so, as she was too busy dealing with personal matters after John left the home. Despite her belief John would come back to her, begging to reconcile, John eventually found a new girlfriend (Jill) and they found a nice condo to rent near the lakeshore in Anywhere. The parties had their trial in the fall of 2022, as the court had some time to address their case. It was a short trial, as the property issues were the only issues remaining by the time they reached trial.
Let’s analyze the case.
- The parties were married, and Jane obtained an order for exclusive possession. So, an application under the FLA will govern
- John dutifully paid his spousal support, and they agreed to fixed term duration well before the trial
- Jane hastened John’s departure with her conduct
- John made his claim for occupation rent at the earliest possible time
- John did not bring a motion to sell the home for two reasons: one, the case was going on during the Covid-19 pandemic restrictions, and he really did not want to sell in what he thought would be a distressed market, and two, the case moved rather quickly through the case management system and they were given a trial date relatively soon
- John and Jane shared the responsibility for the monthly bill payments
- John and Jane had no children
- While Jane lived in the house up until trial, she painted some rooms some different colours and decorated it more to her liking, she did not make any improvements to the house – she simply maintained it
If we consider all of the factors, a court will likely order Jane to pay John occupation rent. To calculate what that rent would be, the evidence at trial would be that they could have received a monthly rent of $2,500 for the 12 months he was living outside the home. One-half of this would be $1,250.00 per month, or $15,000.00. Add to this one-half of the cost of hiring a move for $2,000.00, i.e. a further $1,000.00 as a post-separation adjustment, given Jane’s actions precluded John from having his buddies move him out for free. All other household expenses/carrying costs were already equally split.
Thus, John would likely receive an occupation rent award of $16,000.00.
Conclusion
When deciding whether to remain in the jointly owned matrimonial home or deciding that it is better to leave on your accord (before the situation gets worse), a good lawyer will counsel you on the implication of a claim for occupation rent. It may not be a first, second or third thought for a person when they separate, but it must be considered as part of a strategic separation plan. A very good lawyer will not only explain to you the legalities around making or defending such a claim, but they will also explain the practical realities of either staying in the home or leaving them, both short term and long term. Affordability, meeting child-care responsibilities, commutes to/from work, and dealing with present/future conflict with your former spouse are only some of the real-life considerations that you must ponder when deciding whether to stay or go. There’s no point in fighting for something that is not in your best interests, just to “win” a point. The only people who really win those battles are the lawyers. And as you know, they get paid enough already.