Pavey Law Logo
cottage law

Cottage Law 101

A cottage is the place where many go to get away most weekends during the summer. For some families it may be a small cabin in the woods, and for others it’s a fully furnished home away from home. 

While visiting the cottage may be picturesque, owning one has its own complications. Aside from general real estate law issues, there are a series of other issues specific to owning a cottage itself. Does the cottage represent an additional piece of matrimonial property? Who technically owns it if it’s ‘in the family’? How will it be passed onto future generations?

Here are just a few of the legal issues that come along with that dockside view:

Cottage Purchasing Issues 

When you purchase a standard piece of real estate property, there are issues that you’ll want to investigate. You’ll likely want to make your offer conditional on a home inspection, for example, to make sure that there are no major defects with the property. You’re also going to look closely at the neighbourhood, the area, and assess if it’s the right home for you.

When buying a cottage however, there can be additional issues at play. You may not know the area well or may have little sense of the neighbourhood because the residents are mostly seasonal. You’ll also have to look at how the cottage is accessible – is it accessible only by water? Is there an access road? Is there a private road? How is the road maintained?

There may be other laws that come into play such as with your water supply, and whether your property provides the water supply for neighbouring properties.

A Family Divided – What Happens to the Cottage?

Cottages are often ‘family’ properties, even if they’re legally only owned by one or two family members. They’re often family gathering places for siblings, cousins, grandchildren, friends, and whoever needs a place to get away for a little bit. Even when families get along well, it can be helpful to have some sort of schedule or reservation system within the family to keep everyone peaceful.

What happens though when a relationship ends and a family divides, and how does that affect cottage ownership? That’s when things can become much more complicated. If the cottage was owned by a married couple who spent significant time there, it can be considered an additional matrimonial home, and treated accordingly when the couple goes to divide net family property.

However, the division is about the value of the cottage, not the property itself. If one person’s name is on the title, they may be the one to retain the property, and their former spouse is then able to recoup the value of their interest in the cottage. This also makes the family sharing arrangements more complicated, as an acrimonious split can likely mean some family members losing access to their favourite summer spot. 

Pass It On – Estate Planning Considerations

Many cottage properties in Ontario are multi-generational, whether they were initially built by an ancestor or are now moving into new generations of ownership. So how can cottage owners effectively pass on ownership of their cottages after they pass?

Suppose you and a sibling both inherit a cottage from your parents. You and your sibling will ultimately decide what you would like to do with the property. If only one of the siblings wants to keep the property and the other is indifferent, then one sibling can buy out the others’ interest and leave that sibling with clear title to the property. If neither sibling is interested, renting or selling the cottage and dividing the proceeds may be the right solution.

For the parents looking to pass on the property, the goal is usually to do things in a smart way, and not have the tax headaches turn the property into a burden rather than a benefit. An estate planning lawyer can work with you to determine a smart plan, whether that involves holding the property in trust, structuring additional terms, or another setup that may help minimize the tax implications. 

Naturally many of these points assume that everyone is behaving civilly, but that may not always be the case. If there is litigation surrounding the estate, or the cottage ownership itself becomes subject to litigation, then an estate litigation lawyer can help. This may mean coming up with creative solutions to bring everyone back together or guiding you through litigation to protect your interests in a difficult dispute. 

Final Thoughts

The cottage may be a cherished piece of family property, but it is also a unique one with its own set of challenges. Whether you’re looking to make a purchase, or you’ve recently inherited a cottage, you should know exactly what you’re getting into.

We represent cottage owners and families throughout the Cambridge, Kitchener, and Waterloo Regions dealing with their real estate and estate law issues. Contact us today to set up a consultation.