28 Oct Who Gets the Home when Couples Separate in Ontario
When couples get a separation or a divorce in Ontario their family home is often their most significant asset. Who gets the matrimonial home, or whether it must be sold and the proceeds distributed may be a point of contention between the parties.
Rights of Possession:
Under the Ontario Family Law Act each married spouse has the right to possession of the matrimonial home (regardless of ownership) until a court order or separation agreement of the parties terminates that right; and neither party may dispose of or encumber any interest in the matrimonial home (by sale, mortgage, lease or otherwise) unless the other spouse consents to the arrangement, the court authorizes the transfer, the parties have both designated another property as their matrimonial home and registered the designation on title, or the other party has released their rights in the matrimonial home pursuant to a separation agreement.
There are a number of factors which will impact upon the disposition of the home including 1) who has the legal title to the home (does it belong to one party or to both?); 2) Who can afford to remain in the home; 3) Is keeping the home necessary to secure support obligations under section 34 (1) ( c) or (k) of the Family Law Act? And 4) can the parties reach agreement as to what should happen to the family home?
The Jointly Owned Home
Discussing your arrangements and legally signing a separation agreement are integral first steps in your divorce process. In the absence of a separation agreement of the parties, unless the home is necessary to secure support orders, the court cannot transfer the jointly owned property to one spouse over the other, rather it must order a sale of the home under the Partition Act; and in that case neither party has any first right of offer or first right of refusal. At best, either party or both may make a bid on the property once it has been listed for sale.
Transfer by Separation Agreement
If the parties do agree that one party may acquire all of the interest in the property from the other the next step would be for the parties to establish the value of the matrimonial home. Value can be determined in a number of ways. If the parties agree as to the value of the home on the date of separation that agreed amount can become the basis for an agreement or order. If the parties don’t agree as to the value then their lawyers may wish to explore whether they can agree as to a method to determine value (such as by the appointment of an agreed real estate agent or certified appraiser to provide a letter of value).
Valuing the Matrimonial Home When the Spouses Don’t Agree
In the absence of separation agreement the parties will need to obtain a formal valuation by a certified real estate appraiser. If the parties each get their own valuations and disagree as to the results then they may have to go to court to have a judge determine the value. In that case the judge will not pick a value between the two numbers but rather shall choose between the appraisals that appraisal which the judge believes on the evidence is most correct, and that appraisal will become the base for determining the amount to be paid to acquire the other spouse’s interest in the home.
Deducting Real Estate Fees and Legal Costs
Whether the parties reached agreement on the value of the home or if the value was determined by court order, the party who acquires the interest will usually want to have an adjustment made to take into account the costs that that person will eventually face when they sell the home in the future. The law permits the judge to credit such notional expenses to reduce the amount to be paid to the departing spouse provided that the person acquiring title can show satisfactory evidence of a likely disposition date and demonstrate that such costs will be inevitable when the owner ultimately disposes of the home. The logical basis for the right to make such a deduction is that neither spouse should bear the entire costs of disposition – that costs, like benefits, should be shared equally by the parties.
Court Ordered Sale before Trial
Ontario courts recognize the right of an owner (whether the sole owner or a joint owner) to sell their property. When the land is a matrimonial home that right may be set aside if the sale of the land would defeat the competing rights of the other spouse as set out in the Family Law Act (for example to an equalization of net family property, or to preserve the residence of a vulnerable spouse or child).
The judge may order a sale of the property unless the party trying to resist the sale has a competing interest in the home under the Act. If the spouse who is resisting the sale does have a right then the sale will be denied unless the selling party can demonstrate how the sale will not prejudice the other party.
What to Do if You Are Getting a Divorce in Ontario?
If you are getting a divorce and are not sure what to do with your home, you need to get a divorce or family lawyer. Our family law firm in Barrie, Ontario has great Family Lawyers on staff who would be happy to sit down with you and discuss your options.