Divorce is an extremely emotive subject. Alongside the emotional strain of a relationship breaking down, there are legal questions that need to be addressed. Shared property will need to be accounted for and arrangements made for the uninterrupted parenting of any children involved.
One of the most common issues at this juncture is deciding what happens with the family home. Who gets it? Does it need to be sold? In this week’s blog, we’ll examine what happens to the family home following a divorce.
The Legal Side of Selling a Home After Divorce
According to the BC Family Law Act, a married couple will typically share equally any property that accrues during their relationship.
It’s noteworthy that this law doesn’t apply to property one spouse brought into the relationship. If the value of this property increases during the relationship, that increase is considered “family property” and is divided equally.
To give a specific example of how this might work, picture a scenario where one spouse owns a condo worth $400,000 when the other spouse moves in.
Together the couple paid the mortgage, carried out renovations and the housing market increased in demand. As a result, the condo has increased in value to $500,000 at the time of separation. The spouse who owned the condo originally would keep the $400,000, but the additional $100,000 would be split between both parties.
Staying in the Family Home
When a married couple decides to divorce, both spouses usually have an equal right to stay in the family or matrimonial home. You aren’t allowed to sell, rent or mortgage the family home without the other spouse agreeing. If one spouse decides to stay, they’ll need to buy out their former partner. This can involve refinancing to give the ex-partner a lump sum payment.
This can be problematic for a lot of people, with the Bank of Canada’s mortgage stress test placing a hurdle in front of those trying to qualify solo for a mortgage. Any lender who is approached in this situation will likely ask for the following information:
- A Separation Agreement
- Amount (if any) of child support payments
- Amount (if any) of any spousal support payments
If the lender approves and provides finance, there are several more formalities that need to be tended to. The former spouse will need to be removed from the home’s title and released from the mortgage. At this point it’s recommended to consult with a family law expert on how to achieve these dual goals. If the former partner isn’t released from the mortgage, they continue to be responsible for its payments.
Who Should Move Out?
So, both parties have an equal right to stay in the home after a divorce. How is it decided who moves out? Several considerations typically go into this decision.
- Do both parties get on well enough to continue co-habitating?
- Do either party want to keep the home?
- Can either party afford to keep the home?
When children are involved, the situation becomes slightly more complex:
- Who will the children be living with post-separation?
- Where do the children attend school?
- Can the spouse moving out afford a second home big enough for the children?
- How much potential conflict will the children be exposed to?
Common sense dictates the spouse who will be primarily caring for the children, or staying in the home (after buying out the other spouse) will be the party who stays in the family home.
Here to Help
Need advice with any aspect of the divorce process? At Westside, we’ve helped countless clients navigate this difficult time. Contact us and we’ll be happy to assist.