Family Patrimony and Mortgage in Quebec | Rights and Sharing

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Family Patrimony: Quebec's Legal Framework

The family patrimony regime was established in Quebec on July 1, 1989, and is codified in articles 414 to 426 of the Civil Code of Quebec. This regime is of public order, meaning no marriage contract or private agreement can exclude its application for married or civil union couples. Family patrimony was created to ensure minimum economic protection for spouses upon dissolution of the marriage, by guaranteeing an equitable sharing of certain assets essential to family life.

Assets Included in Family Patrimony

Family residences (principal residence and secondary residence used by the family)
Furniture in the family residences
Automobiles used for family travel
Rights accumulated during the marriage in retirement plans (RRSPs, pension funds, DPSPs)
Earnings registered during the marriage under the Quebec Pension Plan (QPP) or Canada Pension Plan (CPP)

Calculating the Family Residence Sharing

Upon dissolution of the marriage, the net value of the family residence is calculated as follows: the market value of the property at the time of separation, minus the mortgage balance and property-related debts. This net value constitutes the residence's share in the family patrimony. Each spouse is entitled to half of this net value. If one spouse invested an amount from an inheritance or gift in purchasing the property, that amount may be excluded from the calculation under article 415 C.C.Q., provided proof can be made.

Equalization payment (soulte): A sum of money one spouse must pay the other to compensate for the difference in value when dividing assets. In the family patrimony context, the equalization payment represents half of the residence's net value that the spouse keeping the property must pay to the one leaving.

Mortgage Implications of Sharing

Family patrimony sharing carries significant mortgage consequences. The spouse who wishes to keep the family residence must generally refinance the mortgage in their name alone to release the ex-spouse from their obligations. This refinancing must cover the existing mortgage balance as well as the equalization payment owed to the ex-spouse. The total new loan amount cannot exceed 95% of market value if insured, or 80% if uninsured. The buying spouse must qualify individually, which means satisfying the OSFI stress test (Guideline B-20) and meeting maximum debt service ratios (GDS of 39% and TDS of 44%). If qualification is impossible, selling the property may become the only option.

The Broker's Role in Family Patrimony Context

The mortgage broker plays a decisive role in the sharing process. Before the separation agreement is even finalized, the broker can pre-qualify the spouse wishing to keep the residence, evaluate refinancing scenarios, and estimate associated costs. This information is invaluable for the family law attorney negotiating the separation terms. The broker then coordinates the process with the notary for the property transfer and new mortgage setup. In Quebec, the broker is regulated by the Autorité des marchés financiers (AMF) and must act in their client's best interest, ensuring the recommended mortgage solution is suited to the client's new financial situation.

Frequently Asked Questions

What is family patrimony in Quebec?

Family patrimony is a set of assets whose value is shared equally between spouses upon dissolution of the marriage. Established in 1989 and codified in articles 414 to 426 of the Civil Code of Quebec, it includes the family residence, furniture in the residence, automobiles used for family purposes, accumulated rights in retirement plans, and earnings registered under the Quebec Pension Plan (QPP).

Is the family residence always part of family patrimony?

Yes, the family residence (or residences if the couple owns more than one used for family purposes) is mandatorily part of the family patrimony for married or civil union couples, even if only one spouse owns it. It cannot be excluded by marriage contract, as family patrimony is of public order.

How is each spouse's share in the residence calculated?

First, the net value of the residence is calculated: current market value minus the mortgage balance and related debts. This net value is divided into two equal shares. The spouse keeping the residence must pay the other half of this net value as an equalization payment. Initial contributions from an inheritance or gift may be excluded from the calculation in certain cases.

Does family patrimony apply to common-law partners?

No. Family patrimony in Quebec applies only to married couples and civil union partners. Common-law partners have no automatic right to share the family residence. Their situation is governed by ordinary property law and their undivided co-ownership agreement, if they have one.

What are the mortgage implications of family patrimony sharing?

The spouse keeping the residence will generally need to refinance the mortgage in their name alone to pay the equalization payment to the other. This refinancing requires individual qualification including the OSFI stress test. If the spouse cannot qualify, selling the property may become the only option.

Can family patrimony be waived?

Family patrimony cannot be waived before the dissolution of the marriage. A marriage contract cannot exclude family patrimony assets. However, at the time of dissolution, a spouse may renounce their share of family patrimony, in whole or in part, under the conditions provided by law (art. 423 C.C.Q.).