My Marriage is Over – Can I Keep the Jointly Owned Home?

It is no secret that the real estate market in Ontario, and the rest of Canada, has changed significantly in the past 5-6 years. Unfortunately, this topsy-turvy market is also placing additional financial pressure on individuals experiencing separation and divorce. “Will I get to keep the jointly owned home?” is a top-of-mind question for many family law clients I speak to.

The short and unsatisfying answer is, “it depends”.

To begin, a jointly owned home cannot be sold without the consent of both parties or a Court Order.

Consent to Keep the Home

The most common way that ownership of a home is transferred from joint ownership of both spouses to sole ownership one of spouse, is on the consent of both spouses.

In this circumstance, the acquiring spouse will generally purchase the interest of the selling spouse, at the fair market value of the home, just like any other purchaser. The selling spouse may have a one-half interest in the home, or another percentage interest, as identified on the title of the property. It is prudent to obtain a formal valuation of the home, to ensure that a fair market value is identified. The parties may agree to transfer the home for another value, however, if they choose to do so, they must carefully document why this value is reasoned and appropriate, in order to avoid a later challenge to a non-standard transaction. Documentation would appropriately occur through a Separation Agreement. A family law lawyer would assist in the preparation of this document.

Factoring the Home into the Larger Family Law Settlement

Where the jointly owned home is not the only property held by the spouses, or where there are support obligations flowing from one spouse to the other, the sale price of the home may not be the only payment owing by one spouse to the other in settlement of family law issues. Your family law lawyer would assist you in evaluating your full range of property obligations and entitlements.

Often spouses agree that a title transfer will be utilized to satisfy some, or all, of the financial obligations owed to the spouse acquiring the other’s interest in the jointly held home. For example, if the value of the acquiring spouse’s one-half interest in the home is $50,000.00 and he/she is entitled to a separate payment of $50,000.00 in settlement of family law issues, the transfer of the home to him/her could satisfy all of that separate payment.

Where the acquiring spouse owes funds to the selling spouse in settlement of other family law issues, then he/she would have to pay to the selling spouse, the purchase price of his/her interest in the jointly held home, plus the other payment owing.  

As is evident from the examples above, the transfer of the home must be factored into the larger family law property settlement. Therefore, even if the transfer of the jointly owned home is on consent, it is important to obtain advice from a family law lawyer to ensure the transfer of the home meets the larger objectives of Ontario’s family law legislation.

Forced Sale of the Home

The issue of sale becomes much more complex in circumstances where one owner-spouse wishes to sell, and the joint owner-spouse wishes to keep the home. Unfortunately for the spouse who wishes to stay, a person with an ownership interest in real property in Ontario has a right to partition or sale of real property under the sections 2 and 3(1) of the Partition Act. This is true whether the other spouse has an interest in the same property. The sale can be forced by the party seeking sale, by obtaining an order of the Court for sale of the property.

Ontario’s Family Law Act does not give the court the general authority to change ownership of assets and transfer ownership between spouses. In fact, Ontario’s courts have been clear they cannot force one owner-spouse to sell their joint interest to the other owner-spouse.

The effect of the Partition Act and Family Law Act working in combination, is that one spouse has the ability to force the sale of a jointly owned home on the open market and bar the other’s ability to become the purchaser of the property. There are a few exceptional circumstances in which a court may exercise discretion to not order sale of the home on a claim for sale under the Partition Act. The onus is on the party opposing the application for sale to show they fall within the narrow exceptions to sale.

On sale of a jointly owned home on the open market, net proceeds of sale are generally divided between the spouses, in accordance with their percentage ownership interest, unless directed otherwise by a Court Order or an agreement of the parties. As is the case with a consensual sale, the treatment of the home on a sale on the open market must be factored into the larger family law property settlement. Again, it is important to obtain advice from a family law lawyer to ensure the sale of the home meets the greater objectives of Ontario’s family law legislation.

Who Can Help If Your Spouse Seeks a Forced Sale

If you find yourself in the position of wanting to retain a jointly held home in the face of opposition from your spouse, your best option is to seek the support of a skilled family law lawyer. Your family law lawyer can assist in the negotiation of a settlement package that includes this outcome. There are many reasons why a spouse might be persuaded to allow you to remain in the home, temporarily or otherwise. For example, a change to the children’s home and surroundings, in the face of an already painful separation, is often a profound hardship for the children. Financially, it may be prudent to wait for the market to improve before considering sale of a home. A sale may be a reasoned outcome, but a period of delay, in which the party who wishes to remain in the home receives exclusive possession of the home and bears its costs, may be reasonable. All manner of win-win settlements may be obtained with the right approach to negotiation and the right family law lawyer.

If your spouse is not inclined to settlement and is determined to force the sale of the jointly held home, it remains just as critical to receive advice from a skilled family law lawyer. Your family law lawyer can help you to evaluate whether you fall into the narrow set of circumstances in which a Court might decline to sell the home, or at least delay sale of the home. If the home is to be sold, your family law lawyer can assist you in obtaining terms for sale that serve your interests. Perhaps you seek a particular closing date. Perhaps you want guidance as the management of the sale or identification of a reasonable price at which an offer for purchase should be accepted. The more expert legal advice that you have in planning your approach, the better the outcome you will obtain.

And what if you are the spouse who is met with a plea by the other to retain the home? If caring and skilled family lawyers are involved, both parties should be able to negotiate terms that meet their needs and interests. Where solutions proceed on this basis, each party and any children will generally obtain their happiest, healthiest and most cost-effective outcome.

At Bair Family Law we are focused on solutions, healing and restoration. Turn to us for optimum and creative family law solutions.