– By Ira Tee, Associate Lawyer

After separating, oftentimes one spouse will leave the former family residence and will live elsewhere. Sometimes, by the time it takes for a family law matter to get through the courts, that spouse will have purchased a new house before a trial or settlement. In this scenario, frequently the other spouse will claim an interest in the new house, even though it was purchased after separation. Occasionally it will cause the other party to file an amended claim or counterclaim and seek to add any other person on title to the new property, which may be the spouse’s new partner. This can cause additional trouble and further conflict between the two households.

The argument is that the new house was purchased with family assets (e.g., money in bank accounts, etc) that existed at the time of separation. Under s. 84(1)(b) of the Family Law Act:

(1) Subject to section 85 [excluded property], family property is all real property and personal property as follows:

(a) on the date the spouses separate,

(i) property that is owned by at least one spouse, or

(ii) a beneficial interest of at least one spouse in property;

(b) after separation,

(i) property acquired by at least one spouse if the property is derived from property referred to in paragraph (a) (i) or from a beneficial interest referred to in paragraph (a) (ii), or from the disposition of either, or

(ii) a beneficial interest acquired by at least one spouse in property if the beneficial interest is derived from property referred to in paragraph (a) (i) or from a beneficial interest referred to in paragraph (a) (ii), or from the disposition of either.

Effectively, if a spouse uses family property to purchase new property after separation, the other spouse has a legal basis to claim an interest in the new property and that interest would need to be considered in a settlement of the division of family property and debt. However, if it can be shown that the funds used to purchase the new property were derived from funds or income earned after separation, this may not be an issue.

To avoid additional issues at trial or in settlement related to the new property, parties should avoid purchasing new property until the settlement or a trial decision of the division of family property and debt are finalized. If you are unable to wait, legal counsel will be able to advise of the potential consequences to your situation and may be able to help you avoid a further claim by your spouse.

If you’re in this situation, contact us today at Cote & Evans Trial Lawyers.