Who gets the family home when a marriage breaksdown !

ANOTHER GREAT "MUST READ" by Mark Weisleder.

Without a marriage contract, most assets accumulated by a couple will be divided 50-50 on separation. But in order to minimize the impact of divorce on a family, in many cases one spouse stays in the house with the children while the other spouse leaves.

Here are some questions about this issue from readers:

How is the matrimonial home valued vs. a family business?

This is a tricky question. Although you can appraise a home and a business and put values on them, the tax treatment for each is very different. For example, let’s say you have a home and business and each are appraised at $500,000. They were each purchased for $100,000. When you sell a business, you will have to pay tax on any gain that you made. Yet when you sell your home, which is your principal residence, no tax will be payable. Therefore, in most cases, a home that is appraised the same as a business is actually worth more than the business. This must be taken into account when negotiating any division of property.

Can you be forced to move out?

Can one spouse be forced to move out?

Each married spouse has the equal right to live in the family home. Let’s say the house is registered in the wife’s name alone. They decide to separate. The wife cannot demand that her husband leave. If this cannot be worked out amicably, then the couple will likely have to go to court to get an order as to whether one spouse leaves, or whether the home is sold and the money divided.

Does it matter who stays in the house?

In many cases, upon separation, one spouse will move out of the family home. It will still require the permission of both spouses to either mortgage or sell the home, even if they are not on title. However, while the spouse who lives in the home will not be paying any rent, the spouse who moves out will have to pay rent in another location, and will likely still be responsible for 50 per cent of the mortgage and other expenses in the matrimonial home.

Can the spouse who stays put a mortgage on the home and keep the money?

The answer is no. Even if you leave the home, and even if the property is registered solely in the spouse’s name who stays, you cannot mortgage a family home without the permission of both married spouses.

Do common law spouses have the same rights?

The answer is no. Common law spouses have no entitlement to a share in a family home, unless their name is on title, or if they can prove that they have contributed financially to the purchase of the home. If you are buying a home with your common law partner, you must get your name on title to protect yourself.

Family lawyer Elliot Birnboim of Toronto also tells me that when one spouse gets possession of the family home, this will also affect child and spousal support calculations.

The lesson here is to obtain expert family law advice before you make any decision about what to do with your family home if you decide to separate. The goal should be to balance what will be best for all members of the family, while also ensuring that any property is divided fairly.

More real estate columns by Mark Weisleder

Mark Weisleder is a Toronto real estate lawyer. Contact him atmark@markweisleder.com

Divorce and Real Estate

“One of the initial difficulties of the decision making process of Divorce is how to resolve the house and mortgage situation. This is where third party information can assist you with logical decisions rather than emotional.”

One of the most important decisions is what to do about the house.
In the midst of the heavy emotional and financial turmoil, what you need most is some non-emotional, straight-forward, specific answers.

Once you know how a divorce affects your home, critical decisions are easier.

Typically the first decision is if you want to continue to living in the house. Do you want to minimize change by staying where you are, or sell your home and move to a new place for a fresh start?

Once you are able to reach conclusions there will almost certainly be some financial repercussions to your decision process. What can you afford? Can you manage the existing house on your new budget? Is refinancing possible? Where are you in your mortgage term? What is the penalty to break the mortgage? Can you port your mortgage? Information is power. Is it better to sell and downsize? How much house can you buy on your new budget? How much is my home worth? The purpose of this report is to help you ask the right questions so you can make informed decisions that will be a suitable fit for your situation.

AVAILABLE OPTIONS TO CONSIDER

You have 4 basic housing options when in the midst of a divorce:

1. Retain your ownership.
2. Buy out your spouse.
3. Have your spouse buy you out.
4. Sell the house now and divide up the proceeds. You can determine if you can both buy homes. When there are children involved close proximity is typically a common decision

It's important for you to understand the financial implications of each of these scenarios.

1. Retain Joint Ownership
Some divorcing couples postpone a financial decision with respect to the home and retain joint ownership for a period of time even though only one spouse lives there. While this temporary situation means you have no immediate worries in this regard, keep your eye on tax considerations which may change from the time of your divorce to the time of the ultimate sale.

2. Buy Out Your Spouse
If you intend to keep the house yourself, you'll have to determine how you'll continue to meet your monthly financial obligations, if you are down to one salary. If you used two incomes to qualify for the initial loan, refinancing on your own should be analyzed.

3. Have Your Spouse Buy You Out
If you are the one who is leaving, you have the opportunity to start again in new surroundings with the buy-out proceeds. However, be aware that if the initial home loan is not refinanced, most lenders will consider both you and your spouse as original co-signers to be liable for the mortgage. This liability may make qualifying for a new mortgage difficult for you if you decide to purchase a home, even though you won't have legal ownership.

4. Sell the House Now and Divide Up the Proceeds
Your primary consideration under these circumstances is to maximize your home's selling price. As you work towards getting your financial affairs in order, make sure you understand what your net proceeds will be. Example: after selling expenses, and after determining what your split of the proceeds will be. Note that the split may not be 50/50, but rather may depend on the divorce settlement, the source of the original down payment, and the legislative property laws in your area.

IF AND WHEN YOU DECIDE TO SELL

If you and your spouse decide to sell your home, it will be important to work together through a professional to maximize your return. Differences aside, you both are legally required to sign the listing contracts and forms. As well, both should be active in the ultimate negotiations. Having extensive experience in this sensitive area, accommodations and suggestions are always available to ensure the most comfortable setting to see you through the process.

IF AND WHEN YOU PURCHASE YOUR NEXT HOME

Use the proceeds from your previous home or buy out to determine an affordable price range for your next home. Maintain a clear focus on getting the right home to suit your new situation. You will want to review your new criteria, style, size, price and wish list with your agent to help find a home that provides an ideal fit for your new chapter.

If you would like to sit down and discuss these options as well as receive pertinent information about mortgage financing, selling, house values, please don't hesitate to fill out the form below and we can meet and go over your options at your convenience.
Contact Michelle Makos today !