It happens frequently – after separation, one partner leaves a home in which they have an ownership interest. They may have believed that the home would be sold quickly. They may have been forced to leave because of a criminal charge. Or they may have left voluntarily to decrease tension in the home.
Whatever the reason, it soon becomes obvious that issues relating to the home are not going to be resolved quickly. The party that stays in the house refuses or delays sale of it. Months, or even years, can go by before the matter is resolved, resulting in one party having sole use of the home for an extended period. Meanwhile, the other spouse cannot move on, because their equity is tied up in the occupied property and the bank will not give them a new mortgage without their separation issues being settled.
In such situations, courts have the ability to order the spouse occupying the property to pay the other spouse “occupation rent”.
What is Occupation Rent?
Occupation rent flows from the principal that if you own a property, you have a right to occupy it. If you are denied that right, you should receive some compensation. The amount of the compensation is typically tied to the market rent that you might receive for the property if you were renting it, multiplied by the percentage of your ownership interest in the home. So, if you were a 50% owner of a home that would rent for $1,000 month, you might claim occupation rent from your spouse of $500.
When Will a Court Award Occupation Rent?
The decision to award occupation rent is discretionary, meaning that a judge will award it depending on the particular facts of the case. It is also what the law calls an “equitable” remedy, meaning that it can be applied flexibly to achieve justice and fairness. In Jasiobedzki v. Jasiobedzka, 2023 ONCA 482, the Ontario Court of Appeal called occupation rent “a tool for balancing competing equities.”
Putting it another way, in O.K. v. M.H., 2024 ONSC 1612, Justice McGhee called on courts to look at occupation rent “in relation to the affairs of the whole family, including claims for child and spousal support.”
Factors a court will consider when assessing a claim for occupation rent include:
- The timing of the claim for occupation rent – when did the non-occupying spouse first raise the request for compensation? A significant delay can weaken a claim, particularly if the occupying spouse had no notice that a claim might be brought.
- The duration of the occupancy – the longer the occupying spouse has possession of the home, the stronger the claim may be for compensation to the non-occupying spouse.
- The inability of the non-resident spouse to realize on their equity in the property – most people cannot buy a new home until they’ve received their share of the old home. This situation will strengthen a claim for occupation rent.
- Any reasonable credits to be set off against occupation rent – in the case of K. v. H. 2024 ONSC 1612 for example, an occupying wife’s contribution to condo fees, gas, electricity and home insurance was found to be an appropriate offset against the the husband’s occupation rent claim.
- Competing claims in the litigation – courts can consider whether the occupying party has a claim for unpaid support or other property relief against the non-occupying party. In the case of Elbahr v. El Hadi, 2020 ONSC 5176 for example, the court held that the occupying spouse’s spousal support claim was an appropriate claim to consider against the non-occupying spouse’s claim for occupation rent.
- Whether children reside with the occupying spouse and how the financial costs of child-rearing are being shared by the parents. A non-occupying spouse who is not paying child support, for example, may face significant challenges in obtaining an occupation rent award. An occupying spouse who is paying significantly more child related expenses such as medical/dental, educational or extraordinary extracurricular fees may be able to site these as an argument against a request for occupation rent.
- Whether the occupying spouse increased the selling value of the property – an occupying spouse’s renovations and improvements to the occupied property can help combat an occupation rent claim and establish an “equitable” claim to ownership of a home where the occupying spouse is not on title. However, unilateral improvements made without the other owner’s knowledge or consent may not be recognized.
Strong Claims of Occupation Rent may feature:
- Parties who have not put in place fair arrangements to pay for children, spouses, and house carrying costs
- Sale or buyout of the jointly owned home dragging and no plan for dealing with it fairly
- The spouse that is out of the home being unable to move forward with their life and being required to pay for rental housing
- The non-occupying spouse has been asking for some compensation for being out of the home for some time and the occupying spouse is stonewalling
Weak Claims may feature:
- Child and/or spousal support being paid in an appropriate amounts
- The parties moving forward quickly and in good faith with a sale or buyout of the home
- The non-occupying party having reasonable temporary accommodations available to them or the ability to purchase another home
- The non-occupying party not asking for any form of compensation for being out of the home
Conclusion
Recent Ontario Court of Appeal cases have confirmed that occupation rent is not an exceptional and rare remedy, but it must be “reasonable”. This requires careful consideration of all the competing claims and financial factors affecting the family.
Whether you are the occupying spouse or the non-occupying spouse, consult with a lawyer on how best to develop or defend against an occupation rent claim.