By Sean Schaefer
For most typical couples, their house is the single biggest asset. So what happens to the matrimonial home during a divorce or if your common-law relationship ends?
The Family Property Act, which replaced the Matrimonial Property Act, states that matrimonial property is to be distributed equitably between spouses and adult interdependent partners, or common law couples, after a breakup.
Under the Act, family property is defined as property owned by the spouses, whether jointly or independent of the other. All real estate, such as a home, is family property. It can also include a self-contained dwelling unit, part of business premises with living arrangements, mobile homes, condominiums or suites.
It is also important to be aware of the Dower Act, which ensures that both spouses have a claim to a portion of the family home or matrimonial property, regardless of ownership stakes in the event of death or divorce.
Selling your home during a divorce can be complex and challenging, not to mention the emotional stress it can entail. At Demas Schaefer our team has experience in both family and real estate law. We will ensure your rights are protected in your divorce and in any sale of your shared property.
Understanding your rights
Typically, a home is considered family property in a divorce or when an adult interdependent relationship ends, even if only one partner’s name is on the deed. Therefore, each partner is entitled to an equal share of the value of the home. However, that is not always the case in Alberta.
For example, courts in this province will generally allow the spouse who owned the home before the marriage to claim credit for its pre-marriage value. Any increase in the value of the property during the relationship may still be subject to equal division, however. As well, one partner may have owned the home prior to the relationship and it could be excluded from division under the terms of a prenuptial or cohabitation agreement. These agreements can also define how the family home is to be divided when the relationship ends.
Both you and your partner have the right to live in the family home after the relationship ends or until a court orders otherwise. For example, if there is evidence of family violence, you can apply to the Court of King’s Bench for an Exclusive Possession Order if your spouse refuses to leave after a separation. This is a temporary order and is not intended to determine ownership of the home.
Deciding how to proceed
It is easy to say that the best thing to do is just sell the home and divide the profits evenly. However, sometimes that is not a simple matter. Perhaps the real estate market is flat and you believe your home is undervalued. You might be ready to move ahead but your partner refuses to agree to a sale.
There is not much you can do about a down market except to wait for things to heat up or accept a lower offer. However, if your former spouse is refusing to put the family home up for sale you may need to seek intervention from the court. This should be a last resort, however, since court is time-consuming, stressful and expensive. You should first consider mediation in an effort to reach an agreement.
There may be other considerations that come into play as well. The family home is typically a place of comfort, safety and security. If you have young children you may want to retain the dwelling until the school year ends or until they are more mature. Delaying the sale could be something that can be negotiated with your ex.
Consider your options
Even if you decide to simply sell your home and divide the proceeds, it still takes some careful deliberations and you should seek legal advice to ensure your rights are protected. Remember, a divorce or the end of an adult interdependent relationship can be a challenging and emotional time. Your judgment can become clouded with the pressures you are experiencing.
Your first step will be to agree on a price and how the proceeds will be divided. You can hire a realtor or real estate agent who will be able to do Comparative Market Analysis (CMA) of your home. This analysis compares your property with recently sold, active and expired listings in your area, taking into such considerations as your home’s age, condition, size and location. If you or your partner do not agree on your home’s value you may consider hiring a licensed appraiser.
You can choose to sell your home privately or hire a real estate agent. There are certain advantages to retaining someone else to take on this task. Not only will an agent provide a property valuation but they will take care of marketing and advertising, arrange and conduct property showings, guide you through negotiations and facilitate contractual agreements. An agent generally suggests what repairs will be needed and can arrange to stage your home for the maximum impact.
Keeping the family home
It is not unusual for one partner to want to keep the family home. This can be done through a spousal buyout. As the term implies, one person assumes full ownership of the home while the other receives financial compensation for their share.
Again, the first step involves determining the value of the home and the amount of equity each spouse holds. For some, a CMA might be acceptable to determine the home’s value. However, one person (or both) may want to retain the service of a licensed appraiser.
A spousal buyout can present many more challenges, financially and legally, than selling the home outright so it is imperative to discuss your plan with your lawyer to avoid making mistakes that can impact your future.
We are here to help
Whether you are selling the family home after the relationship ends or considering a spousal buyout, it is essential to understand the home's value and the outstanding mortgage to determine the equity that will have to be divided.
Emotions can have an impact on how you deal with the process so it is important to get advice you can trust for experienced family and real estate lawyers. Contact us today to learn how we can serve you. We offer a free 15-minute telephone or video consultation.