Who Gets the House in a Divorce in Canada?

Who Keeps the House? Property Division in a Canadian Divorce

It is essential to understand what constitutes a matrimonial home in Canada. When a couple gets married, their primary place of residence becomes their matrimonial home. This isn’t necessarily limited to a house; it could be a condominium, an apartment, or even a mobile home. If the couple owns more than one property and uses them all as homes, then all these properties are considered matrimonial homes.

The Equalization Process

In a divorce, the question arises, “Who gets the house?” In Canada, it’s not about who technically owns the property. Instead, the process of asset division follows the principle of equalization, a core tenet of Canadian divorce law. Equalization refers to the process by which the value of all the assets acquired during the marriage is calculated. Each partner’s net value is then determined, and the partner with the higher net value pays the other half the difference.

Click here for more information on how to find trusted divorce real estate agents
Related Article: Who Pays the Mortgage During a Separation?
Related Article: Maintaining Confidentiality and Privacy Throughout the Property Sale Process in a Divorce

The Uniqueness of Matrimonial Homes

The division of matrimonial homes stands as a unique case in Canadian law. Even if one partner owned the house before the marriage, it still becomes part of the matrimonial assets and is subject to division. Unlike other assets, the matrimonial home’s value is not evaluated based on when it was purchased or its worth at the time of marriage. Instead, its value at the time of separation becomes the benchmark.

Factors Influencing the House Ownership

Though the law emphasizes equalization, it doesn’t necessarily imply that the house is always sold, and the proceeds are divided. Several factors come into play when deciding who gets to keep the house, including:

• Children’s Welfare

  : If the couple has minor children, the court usually allows the primary caregiver to stay in the house to minimize disruption to the children’s lives.

• Financial Viability

  : The spouse who wishes to retain the house must demonstrate the financial capacity to maintain the property and refinance any associated loans.

• Mutual Agreement

  : If both parties can agree amicably on who gets the house, the court typically honors their decision.

The Court’s Role in Property Division

If the couple can’t reach an agreement, the court steps in to make the decision. This could result in either one partner buying out the other’s share, or the house being sold and the proceeds divided. The court’s objective is to ensure a fair distribution of assets while considering each partner’s financial situation and future needs.

The Aftermath of Divorce: Refinancing and Transferring Ownership

Once it’s decided who will keep the house, the next step is refinancing and transferring ownership. The spouse who retains the house usually needs to buy out the other’s equity share, which often requires refinancing the existing mortgage. Once refinancing is complete, the title deed must be transferred to the spouse who is retaining the house.

Understanding the Matrimonial Home’s Significance

The matrimonial home holds a special place in Canadian divorce law. It’s not treated like other assets. Even if one spouse owned the house before the marriage, it becomes part of the matrimonial property. This means its value is subject to division, regardless of who paid for it initially. The increase in the home’s value during the marriage is what gets divided. For example, if a house was worth $200,000 when the couple married and $500,000 when they separated, the $300,000 increase is considered part of the family’s net worth. This appreciation is then included in the equalization calculation. This principle recognizes that both spouses contribute to the household, even if one spouse’s contribution is non-financial. It acknowledges the value of homemaking, childcare, and other forms of support that allow the other spouse to accumulate wealth. Understanding the unique status of the matrimonial home is crucial when navigating property division in a divorce.

Options for Keeping the Family Home

While equalization is the guiding principle, it doesn’t automatically mean the house will be sold. Several options exist for keeping the family home. One spouse can buy out the other’s share of the equity. This often involves refinancing the mortgage in the sole name of the spouse who wants to keep the house. They then pay the other spouse half the difference between the appraised value and the outstanding mortgage. Another option is for both spouses to remain on the title, but this is less common and can create complications. It requires a clear agreement outlining who is responsible for mortgage payments, property taxes, and maintenance. This option is usually considered only when the sale of the home is deferred to a later date, perhaps until children reach a certain age. A third option, of course, is to sell the house and divide the proceeds equally (after paying off any outstanding mortgage and costs of sale). The best option depends on the specific circumstances of the family, including their financial situation, the needs of any children, and their ability to cooperate.

Seeking Professional Advice

Divorce involves complex legal and financial considerations, especially regarding the family home. It is highly recommended to seek professional advice. A family law lawyer can explain your rights and obligations under Canadian law. They can help you understand the equalization process and how it applies to your specific situation. They can also negotiate on your behalf and represent you in court if necessary. A financial advisor can help you assess your financial situation and develop a plan for the future. They can advise on refinancing options, budgeting, and long-term financial planning. A real estate agent specializing in divorce sales can provide valuable assistance if you decide to sell the property. They understand the sensitive nature of these transactions and can help you navigate the process smoothly. They can also provide an accurate assessment of the property’s market value, which is essential for the equalization calculation. Investing in professional advice can save you time, stress, and money in the long run. It can also help you achieve a fair and equitable settlement.

Click for more information about Jennifer Jewell

Conclusion

Navigating the intricacies of property division during a divorce can be overwhelming. It’s essential to understand the legal framework, but every situation is unique and might require professional legal advice. Divorce is a difficult process, but understanding these procedures can help make the journey a bit smoother. [ 1 ]