Chapter 4: What Happens to My Home?
Should We Sell the Matrimonial Home?
Clients often assume that their home has to be sold and many questions arise. Should you stay in your home? Can you manage the mortgage payments? Is it better to start over? Selling may seem like the logical choice, but there are other options to explore.
Consider the following:
- One person can purchase the other person’s interest in the home. With this option, you may need to increase your mortgage or secure an additional source of financing.
- One person can continue to reside in the home and then later sell it when some time has passed. This may allow the market and your finances to improve.
- Consider the whole financial picture. You may be able to keep the home if the equity equals the value of your spouse’s pension, RRSP or cottage, creating equal assets for both of you.
- Before selling your home, consider where you will go and the costs. It may be that the home is less costly than purchasing another or renting.
- Even if you can afford to stay in the matrimonial home, you may want a fresh start in a new place where you can create new memories.
- Remember; when you sell your home, you usually have to pay 3% to 5% commission to the real estate agent and another $1,000.00 in legal fees.
- Many of the homes listed for sale are the result of a separation or divorce.
- After paying support, the home may be too costly for the payer and the support recipient may not be able to afford it either. This is common. Remember, you are establishing two homes with the same amount of income that you once used to finance a single dwelling. Usually, both clients must decrease their lifestyles to accommodate the change from one home to two homes. As a result, both clients usually have to downsize. This is the reality of divorce.
- If the home is jointly owned and increases or decreases in value after the separation, the increase or decrease is jointly shared with your spouse.
- Don’t buy a new home until you have a separation agreement in place.
- If you and your spouse cannot come to an agreement regarding the home, a judge in Family Court will order it sold.
- Instead of going to Family Court, use the Collaborative Process to negotiate a fair and creative arrangement regarding the home.
Who Pays the Home Expenses?
There are no laws that specifically deal with the payment of home expenses during the time between a separation and a court order or agreement. The resolution of this issue depends on a variety of factors, including your incomes, debts, the support obligation and who is living in the home. Our lawyers can provide advice that meets the specific needs of your unique situation.
The following is a list of principles that may be helpful.
- If you are living in the house and your spouse has moved out, generally, you should pay the utilities and home insurance.
- Protect yourself. Don’t let a petty argument about the utilities result in a ruined credit rating.
- If you and your spouse live in the house together, you can equally share the cost of the utilities or divide it in proportion to your incomes.
- If one of you is paying more of the debts, you may decide to share the cost of utilities unequally too. You can be creative.
- Mortgage payments are treated differently than utility payments because you are protecting the value of an asset. As a result, you share the mortgage payments even if you’re not in the home.
- “Occupation Rent” is money paid by the person living in the home to the person who has moved out. Generally, the amount owed is the fair market rent for the home less fifty percent (assuming you own the home jointly). Often, if the person in the home is paying the mortgage (a joint debt), it is approximately equal to the amount of occupation rent owed. So, it’s awash. Our lawyers can help you consider whether there is occupation rent owed in your situation.
- Until the house is sold, sometimes the cost of the home (utilities, mortgage, insurance, and minor maintenance costs) is paid instead of support payments.
- If you are hoping to keep the home, you should hold off on doing any major maintenance or renovations until you have a separation agreement in place to ensure you will get ownership of the home.
- If the home is jointly owned and is going to be sold, any cost incurred to prepare it for sale is shared equally since both of you will enjoy the benefit when the home is sold.
- Keep track of what you are paying so it can be sorted out fairly.
- In Family Court, the judges are restricted in what they can do. So consider using the Collaborative Process instead. You can creatively develop an arrangement that works for both parties.
