Keep or Sell Matrimonial Home? Navigating Divorce in Ontario

Meet Jill. She’s just like you and me, navigating the complexities of life with grace and resilience. But today, Jill stands at a crossroads, a decision that will significantly impact her life and those she holds dear. She’s going through a divorce, and the question that looms large is whether to keep or sell the matrimonial home.

Jill’s home is more than just bricks and mortar. It’s a repository of memories, a sanctuary of comfort, and a symbol of stability in a world that’s suddenly turned upside down. But the reality of her situation is stark. She needs to make a decision, one that balances her emotional attachments with the cold, hard facts of financial viability.

This is not just about a house; it’s about Jill’s future, her financial security, and the wellbeing of her children. It’s about navigating the legal labyrinth of divorce laws in Ontario, understanding the implications of the Family Law Act, and grappling with the realities of asset division. It’s about making a decision that’s not just right for the moment, but for the years to come.

Join us as we walk with Jill through this journey, exploring the intricacies of this critical decision, and shedding light on the factors that will shape her choice. This is not just Jill’s story; it’s a story that could be yours or mine. It’s a story about making tough decisions, finding strength in adversity, and charting a path towards a new beginning.

How is the matrimonial home split on divorce in Ontario?

In Ontario, the Family Law Act provides special status to the matrimonial home, treating it differently than other family property. This means that no matter who holds the legal title, married spouses have an equal right to possession. This principle applies even if only one spouse owned the home at the time of marriage.

However, the division of the matrimonial home is only sometimes a straightforward process. In the event of a divorce settlement, the value of the matrimonial home, along with other assets, is included in calculating each spouse’s net family property. The goal is to equalize the financial position of both spouses.

How do you calculate the house split in a divorce?

The process begins with determining the net family property of each spouse. This calculation includes the value of each spouse’s assets accumulated during the marriage, less any debts and liabilities. This consists of the full value of the matrimonial home, regardless of pre-marriage property value.

Each spouse’s net family property is then compared, and the spouse with a higher net family property might make an equalization payment to the other, effectively dividing the total value of the marital assets. This could impact home ownership, as one spouse may need to buy the other out, or the home may need to be sold to divide the assets.

However, it’s crucial to remember that many factors can affect this process. For instance, a court order or separation agreement could dictate different terms. Furthermore, if there is evidence of domestic violence or extreme circumstances, the court may grant an order for exclusive possession to one spouse.

Who gets the house in a divorce in Ontario?

The decision of who gets the matrimonial home in a divorce varies. It can depend on factors like the spouses’ financial situation, whether children are affected, and existing support orders, among other considerations.

In some cases, a party wishing to remain in the home might negotiate to offset the value of the matrimonial home against other marital assets. In different situations, spouses may agree to sell the home and equally split the proceeds. Alternatively, one spouse may acquire the other’s share, requiring the payment of land transfer tax.

Where children are involved, the court often considers their best interests. This could mean that the children’s primary caregiver remains in the family residence post-separation. Nevertheless, any final decision should always be guided by professional legal advice.

A Perspective from Certified Divorce Real Estate Expert

A Certified Divorce Real Estate Expert (CDRE) specializes in providing real estate guidance and support during the divorce process. They possess specialized knowledge and training that allows them to assist divorcing couples in making informed decisions regarding the division of real estate assets. Here are some ways a CDRE can help:

• Property valuation: A CDRE can assess the value of real estate properties owned by the divorcing couple. They consider factors such as market conditions, location, property features, and recent sales to estimate the property’s worth accurately. This valuation is crucial when determining the division of assets.
• Asset division: Once the property valuation is complete, a CDRE can help the couple and their legal representatives understand the implications of different property division scenarios. They can provide expert advice on equitably distributing real estate assets based on the couple’s unique situation and local divorce laws.
• Sale assistance: If the divorcing couple decides to sell their property, a CDRE can assist with the sale process. They can recommend strategies to enhance the property’s market appeal, connect the couple with qualified real estate agents, and guide them through the negotiation and closing processes.
• Buyout options: In cases where one spouse wishes to keep the property, a CDRE can help explore buyout options. They can help determine the buyout price based on the property’s value, outstanding mortgage, and other relevant factors. They may also guide refinancing options to facilitate the transfer of ownership.
• Mediation support: In situations where divorce mediation is pursued, a CDRE can serve as a neutral third party, providing expert advice and guidance to help the couple reach a fair resolution regarding real estate assets. Their role is to educate both parties about the real estate implications and help facilitate a mutually beneficial agreement.
• Collaborative approach: CDREs often collaborate with other divorce professionals, such as divorce lawyers, financial planners, and mediators. They work as a team to ensure a comprehensive and coordinated approach to resolving real estate matters in divorce.

By leveraging their expertise and specialized knowledge, a Certified Divorce Real Estate Expert can help divorcing couples navigate the complexities of real estate division, ensuring fair and informed decisions that align with their circumstances and goals.

Matrimonial Home symbolizes comfort and security.

The matrimonial home often symbolizes comfort and security. When a marriage ends, it’s natural to cling to what feels safe and familiar. This reaction isn’t gender-specific, but it’s fair to say that in many cases, the spouse who primarily cared for the family, often the wife, especially when children are involved, may wish to keep the family residence.

Assuming it’s the wife who wishes to maintain possession of the matrimonial home, it’s generally better for the family if the original family residence continues to serve as such. However, it’s crucial to consider whether she can afford to stay in the home.

The decision to stay in the matrimonial home is often based on emotion, with little consideration given to the financial implications. This is where a real estate lawyer or financial advisor becomes invaluable, providing a reality check to your situation.

How can they assist? By helping you compile a list of financial obligations you’ll face post-separation. In many common-law relationships or marriages, one spouse may have been responsible for paying the bills, and the other may not have a clear understanding of the actual costs. In today’s world, with many women in the workforce and salary gaps gradually narrowing, the roles may be reversed.

Here are some expenses you must consider, as they won’t disappear just because you wish them to. You also need to consider the potential consequences. For instance:

• Insurance: health, life, automobile. Which one could you afford to give up?
• Utilities: gas, water, oil, electricity, phone(s)—cell phones, home phone, internet, etc.
• Groceries & dining out. Consider that you might not be able to dine out as frequently.
• Automobile: Normal wear & tear repairs; fuel; regular maintenance; new tires. How old is your current vehicle, and how much longer will it last?
• Home: How old is the roof? When will the house need repainting? What is the current condition of the home? Is the mortgage higher than the value of the home if it comes time to sell? Will you have the time or inclination to maintain the yard and home?
• Clothing for you and the children. If the children are under eighteen, they are likely growing out of their sizes frequently, and fashions are changing.
• Children’s Extracurricular Activities. Regardless of their age or where you live, the children will likely be involved in some activities, which always involve costs.
• Credit. Especially if you have been the stay-at-home parent, have you maintained established credit or a current payment record? Do you have perfect credit, but your spouse has some ‘issues’? This will affect you if you haven’t taken steps beforehand to separate your credit from theirs.
• The Dreaded Unknown. This category can disrupt every plan you’ve made in an instant. A plumbing leak or a minor car accident, for instance. There is simply no way to accurately budget for the Unknowns.

None of this is what you want to hear; but if you ignore reality, the aftermath of the divorce could be more challenging than the separation process itself, especially if you find out soon after that keeping the home was not financially viable.

You might argue that you’ll be receiving child support. However, there are two things to think about: a) what if you don’t receive the payment? b) Remember, your ex-spouse will be facing the same financial adjustments you are. It’s risky to base your delicate financial balance on this.

There are many more factors to consider when deciding whether to keep or sell the matrimonial home post-divorce. If you genuinely want it, I hope things work out for you. My hope is that you will now see this issue in a clear light and make a safe and sound decision for yourself and your children.

Other Matrimonial Home Setttlement Options to Consider

A Certified Divorce Financial Analyst (CDFA) is a professional who specializes in providing financial guidance and analysis during divorce proceedings. They can help divorcing couples understand their options related to the matrimonial home. Here are some common options:

• Sell the home: One option is to sell the matrimonial home and divide the proceeds between the spouses. A CDFA can help determine the property’s fair market value, assess selling costs, and guide the couple through the sales process.
• Buyout: If one spouse wants to keep the home, they can choose to buy out the other spouse’s share. The CDFA can help determine a fair buyout price based on the property’s value and any outstanding mortgage or equity. They can also provide financial guidance on securing a new mortgage or refinancing the existing one.
• Co-ownership: In some cases, divorcing couples may decide to continue co-owning the home, especially if children are involved, or financial constraints make it challenging to sell or buy out the property immediately. The CDFA can assist in determining the terms of co-ownership and ensure both parties understand their responsibilities and rights.
• Deferred sale: If minor children are involved, a court may order a deferred home sale until they reach a certain age or complete their education. The CDFA can provide financial analysis to help determine the feasibility of this option and calculate the potential financial implications.
• Rental income: Sometimes, couples may agree to rent out the matrimonial home and share the rental income. The CDFA can help evaluate this option’s potential rental income and expenses to ensure it aligns with both parties’ financial goals.
• Equitable trade-offs: In complex divorce cases, the value of the matrimonial home can be offset against other assets or financial considerations. The CDFA can analyze the overall financial picture and suggest equitable trade-offs to ensure a fair division of assets.

A CDFA plays a crucial role in assessing the financial implications of various options related to the matrimonial home in a divorce. They can provide valuable insights into each option’s short-term and long-term financial consequences, empowering the divorcing couple to make informed decisions that align with their financial goals and circumstances.

Final Thoughts

The decision to keep or sell the matrimonial home in Ontario is a significant one that should not be taken lightly. While the Family Law Act in Ontario guarantees an equal right to possession of the matrimonial home to both spouses, the actual division of this asset can be complex.

As with all property division, it is essential to calculate each spouse’s net family property, considering all other assets and debts, not just the matrimonial home. A common law relationship or marriage contract may change how the home and other family property are treated. In situations where domestic violence is a factor, an order for exclusive possession may be granted to the abused spouse.

Deciding who gets to keep the house depends on many factors, such as the financial situation of both parties, their wishes, existing support orders, the best interests of any children, and whether affordable accommodation is available for the other party. In some cases, exclusive possession may be the most suitable solution, with only one spouse ordinarily occupying the matrimonial home post-separation.

If the home is sold, the proceeds can be divided as part of the equalization payment process. But remember, selling a home involves various costs, such as real estate agent fees, land transfer tax, and potentially mortgage penalties. So, it’s crucial to seek the advice of a real estate lawyer or financial advisor to understand the complete financial implications.

In conclusion, your specific situation, needs, and legal advice should guide your decision. While navigating family law and the separation process can be challenging, online services and resources, like The Smart Divorce, can provide valuable assistance in these emotionally fraught times. Always remember, the goal is to achieve a divorce settlement that best supports your new living arrangements, financial position, and the best interests of all involved.