Bankruptcy and Veto Powers under the Homesteads Act

In, Chartier v Chartier Estate (Trustee of) the Manitoba Court of Appeal determined that the veto power of a non-owning spouse under the Manitoba Homestead Act vested in the trustee in bankruptcy when the non-owning spouse’s homestead was sold. In this case, Mrs. Chartier declared bankruptcy before she was married and was an undischarged bankrupt. She then married Mr. Chartier and together they decided to sell their homestead. Her trustee in bankruptcy concluded that the homestead interest was after acquired property that vested in the trustee in bankruptcy and registered a Homestead Notice against the house. Mr. Chartier challenged the classification of the non-owning spouse’s veto power as after acquired property and the validity of the Homestead Notice. The Manitoba Court of Appeal found that the non-owning spouses veto right does vest in the trustee in bankruptcy when the homestead is being sold and that the trustee in bankruptcy can exercise this veto power. Although the Manitoba and Saskatchewan legislation with respect to homesteads differ, there are many similarities between the Acts. Debtors and creditors should be aware that the decision in Chartier v Chartier Estate (Trustee of) suggest that a trustee in bankruptcy may potentially claim and utilize a non-owning spouse’s veto power when a homestead is being sold in order to satisfy debts to creditors.

Chartier v Chartier Estate (Trustee of) 2013 MBCA 41