Separating? Divorcing? Who Gets the House?

January 21, 2021

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January is a month of intentions, beginnings… and, unfortunately, divorces. According to my sources this January, the number of couples looking to separate has increased thanks to the pandemic.

Why January for separations? Ending a marriage/relationship right before the holiday season isn’t always ideal, especially if children are involved; the holidays can put stress on an already fragile relationships. December is a time of reflection; and January is synonymous with fresh starts.

Most couples are not used to being confined to their home together for long periods of time – and since the first lockdown of Covid-19 in mid-March 2020, we have all been forced to spend months at home. We have endured months of hardship – people losing their jobs and businesses, dealing with challenges of working at home, home schooling and more. With all this pressure, I am frankly not surprised at the uptick in break-ups.

The first question is: Who is entitled to live in the matrimonial home. The second is: Who really owns the home, and whether or not the home can be sold. The answers to these questions can vary depending on whether the couple is common-law or married.

Were you aware that the law treats common-law couples differently in terms of assets, including the home? Married spouses have a right to possess the matrimonial home and that cannot be defeated without the consent of the other spouse (or a court order). Common-law status, however, isn’t considered legally binding in Ontario.

The person registered on the property can mortgage, sell, or dispose of the home without the common-law spouse’s consent. It doesn’t matter whose name is on the official documentation and ownership for the house, as soon as a married couple share the home, it becomes property of both parties. It doesn’t matter if the home was obtained through inheritance, individual purchase, or familial loans — as long as partners shared the home prior to the date of separation, it is considered the matrimonial home.

The decision to sell the property is predominantly a financial one. Sometimes one party can buy the other party’s share in the matrimonial home so that they can remain in the home, however that is not always the case.

For the most part, selling the home is a necessity because neither party can afford to keep it on their own, or because one party refuses to sell to the party who is able to buy them out.  Now, in some cases, the sale is court ordered.

One of the most important things to remember is that the parties should have an accurate ‘opinion of value’ for the subject property in all cases, but even more so when the home is to be purchased by either party. An ‘opinion of value’ can be obtained through your Real Estate Representative.

The reality is that the matrimonial home is usually the largest asset the couple owns. “The proceeds of the sale of that home most often required for both parties to purchase or rent their own homes.

So, what happens to the mortgage?

Most couples who have not been able to pay off the mortgage have to sell
the house as the distribution of funds from the sale of the home must be used
to pay off the mortgage. Depending on where the couple is in the process of
the separation, the funds may sit in a trust account until a final and complete
separation agreement has been signed although in other situations, some of
the funds or even all of the funds may be released.

Avoiding sugar-coating anything I must say that dealing with divorce-related real estate isn’t always a walk in the park. There is often a power struggle between the couple when it comes to listing and selling the home.

Many of the disagreements involve the list price, closing dates, the showing process, how information is shared, signage, marketing, prepping the home for sale, who to use as a lawyer for the closing of the transaction not to mention which Real Estate Agent to use.

The answers and guidance must factor in both the legal obligations (is there a court order that exists and spells out some of these specifics?), as well as what are ultimately best practices in the sale of the home.”

One (big) thing to keep in mind is that the implications of leaving the matrimonial home during separation can be enormous.

I know from experience that unless you or your children are in physical danger, it’s best not to leave the home until matters are resolved.

If you do leave your home, you are unlikely to be taking your children with you. This sets up a de-facto parenting arrangement and the co-parent then becomes the primary caregiver of the children. While this isn’t irreversible, the challenge of trying to regain custody can be arduous and costly. Leaving the home and the kids may also place you in a position of having to pay spousal and child support right away.

I am, in now way suggesting that I know all of the ins and outs of divorce. My best advice to anyone who is considering divorce is to make an appointment with a very good divorce lawyer and take their advice.

I do have personal experience in a “divorce and the “selling” of a matrimonial home, and I have also assisted a number of clients in selling their home due to a divorce.

One of the things I would like to impress upon anyone who is in the middle of a “break up” is that when you do decide to put your “home” on the market, you obviously want to get fair market value/or higher for the property, so please remember these two things.

  1. ‘Keep up appearances’ – try really hard not to give the impression that this is a dissolution of a relationship.
  2. Do not behave like you are desperate to sell (even if you are). This could cause a property to be bought for less, so keep the reason for the sale a secret

As a Real Estate Representative, my job is to sell your house for the best price possible. One of the ways to do this is to sell, not only the home, but the image of a happy home life. Selling the image of a happy home life is paramount.  One of the ways to do this is to make the home looking welcoming.

Sometimes staging is involved however this is not absolute.  A home that looks not only beautiful but also inviting and cozy is what we hope to achieve whether staging is involved or not.  And maybe it’s just a matter of keeping those wedding and family photos on the walls a little longer if you can.

by Erin Nicole Davis – Two Storeys
Adapted by Gillian Tenneson