What is “Occupation Rent?”
Of the many disputes that arise during the course of a separation and divorce, those related to the disposition of the marital home can be some of the most emotionally taxing and financially significant. Not only is there personal attachment to the home, but the home is often the largest single asset a family owns. When, as is usually the case, one spouse continues to live in the marital home after the other spouse has moved out, the law can sometimes require the spouse remaining in the home to compensate the other for their “share” of a house they no longer have access to. This compensation is known as “occupation rent.”
Occupation rent is a discretionary remedy which can be granted by a Court in certain limited circumstances. The Common Law is partly codified by section 17 of the Alberta Law of Property Act, which allows compensation to a co-owner who has been excluded from the property by another co-owner. This amount is usually fair-market-value rent for the property.
When is Occupation Rent Awarded?
Cases addressing the issue of whether to award occupation rent reveal that a successful claim for occupation rent is dependent on the facts of each individual case. An important case in Alberta is the Court of Queen’s Bench decision in Kazmierczak v Kazmierczak, 2001, which was affirmed by the Alberta Court of Appeal in 2003.
Kazmierczak stands for the proposition that the traditional analysis of occupation rent as a property right arising between co-owners may not always apply with matrimonial property. The Court stated that occupation rent should be awarded sparingly:
“In the family law context, such mutual obligations of support are generally present, and would usually dominate and outweigh the common-law property rights associated with joint tenancy. Occupation rent should only be awarded in the family law context with great caution.”
Factors Considered in Determining Whether to Award Occupation Rent
This Court also summarized the factors that may be considered in deciding whether to award occupation rent in the matrimonial context:
- The spouse who is not in possession generally should not be entitled to occupation rent if the other spouse is occupying the premises with the children of the marriage, and is not making a claim for support or a contribution towards the expenses of the house.
- Where the spouse in possession does make a claim for contribution towards the expenses of the house that claim, the cross-claim for occupation rent, and any claim for spousal or child support should be considered together. The occupation rent would be a potential expense item in one party’s budget, and a revenue item in the other party’s budget.
- In many cases it would be simpler just to eliminate the claim for occupation rent from the equation, and deal with child support and spousal support at large. However, given that the Federal Child Support Guidelines now mandate certain levels of support for children, it may be unfair not to include a notional occupation rent in the guideline income and budgets of the parties, at least when considering spousal support.
- The spouse in occupation will generally not be entitled in the matrimonial property proceedings for any credit for the mortgage payments and taxes paid by him or her. Those payments should be a part of the support equation. The only possible exception is with respect to the portion of the mortgage payment that actually goes to reduce principal, as notionally one-half of that payment is made on behalf of the non-occupying spouse.
- There will be cases where the family unit can no longer afford to maintain the previous matrimonial home. If one spouse insists in staying in occupation of the house, and is prepared to make the necessary financial sacrifices, then fairness may require that occupation rent be included in the overall equation.
- Rarely, if ever, should one spouse be able to bank a claim for occupation rent, and present that claim in capitalized form years later as part of a matrimonial property action.
In Kazmierczak, the Court concluded that occupation rent was not appropriate during the time the children lived in the family home with their father as the mother’s foregoing of rent was seen as her contribution to child support. Generally, if a parent resides in the family home with the children and did not force the other parent out, a claim for occupation rent may be unlikely to succeed.