The Family Home Following Separation: To Sell or Not to Sell?
Tandia Wallace-Hawken
Dividing family property during a separation is no simple task. There are many things to consider, including contributions made by each party, income, earning capacities, liabilities, obligations, when the property was acquired and any agreements between the parties.
There’s one asset in particular that can be a sticking point: the family home.
Residential property is a major asset, both financially and in quality of life. For families with children, it can be especially desirable to continue living in the home after separation. While division of property is ongoing, sale or distribution of the family home may not be ideal in the circumstances; for example, if one party is still living in the home, or there are major ongoing concerns regarding the division of assets. So, what happens if one party wants to sell before all matters regarding separation are finalized, but the other wants to keep it?
If you co-own your home with your ex-spouse, either you or they can apply to the court to end the co-ownership. This application comes with three options:
- Physically divide all or part of the land between the two of you;
- Sell the land and distribute the proceeds between yourselves; or
- Sell all or part of your interest in the property to the other party.
But what if you don’t want to sell the property and they do? What if they proceed with the application anyway? Some people might want to sell if there are outstanding financial debts or if the cost of living is too high.
The court has the authority to put these applications on pause when there are ongoing proceedings regarding distribution of property between spouses upon separation or divorce under the Family Property Act or under Section 68 of the Family Law Act.
There is no set rule as to when the court will exercise their discretion under Section 21, but rather each situation must be individually analyzed and weighed on its own merits. However, there are some key factors that can tip the scales in favour of Section 21:
- Unresolved financial issues
- Lack of urgency
- Reasonable likelihood that the party can afford the home
The court may order the sale of the family home if there are urgent financial matters, such as risk of foreclosure or inability to maintain the status quo. An inability to maintain the status quo might look like the inability to keep up a standard of living and preparing a monthly budget can help demonstrate to the court that the cost of living in the home is sustainable. The presence of alternative housing options, outside support, or having contributors to monthly payments can also mitigate a sense of urgency. If there are financial matters that need a quick resolution, demonstrating that there are alternate assets that can be distributed to manage that matter can also support the proposal that the house should not be sold.
Finally, if you want to remain in the home, you will need to demonstrate that there is a reasonable chance that you can afford it. This may be through income, other assets, or having roommates/family members live with you that contribute to cost of living payments.
Navigating the division of assets during a separation can be taxing, mentally and emotionally. A knowledgeable family lawyer can help you understand your options and craft arguments tailored to your needs. At Vogel LLP, our experienced family lawyers regularly assist in these types of disputes and are here to guide you through the process.