June 14, 2023
Licensed Insolvency Trustees (LIT) may recall that the Office of the Superintendent of Bankruptcy (OSB) raised awareness about the Ontario principal residence equity exemption in the 2021 edition of the OSB News.
The OSB would now like to advise LITs that amendments to the Ontario Execution Act (OEA) regarding the exemption of principal residences from forced seizure or sale by any process at law came into force on June 8, 2023.
Subsections 2(2) and (3) of the OEA now read:
(2) The principal residence of a debtor is exempt from forced seizure or sale by any process at law or in equity if the value of the debtor’s equity in the principal residence does not exceed the prescribed amount.
(3) Despite subsection (2), if the value of the debtor’s equity in the principal residence exceeds the prescribed amount, the principal residence is subject to seizure and sale under this Act.
The amount for the equity in the principal residence is prescribed by Ontario regulations and is currently $10,783.
Pursuant to paragraph 67(1)(b) of the Bankruptcy and Insolvency Act, any property exempt from execution or seizure under any law applicable in the province within which the property is situated and within which the bankrupt resides, is not divisible among the bankrupt’s creditors. Therefore, Ontario bankrupts’ principal residence can now only be realized upon by LITs when the bankrupt’s equity is greater than the prescribed amount.