December 1, 2023 | Selling
Should You Sell Your House During A Divorce?
Occasionally, our clients express apprehension about navigating through the process of divorce. It’s essential to grasp the complexities of separation and potential divorce to make informed choices, especially when children are part of the equation. As we’re not legal experts, seeking professional advice from reliable sources is crucial for such a sensitive matter. In our pursuit of accurate information, we turned to Coach House Law, a reputable real estate law firm based in Toronto, for their trusted guidance on this matter.
Guest Blogger: David Woodside, J.D. from Coach House Law
Whether or not partners should sell the home will depend on the circumstances of the family. Sometimes the sale of a home early in a separation can help a separating family move forward. However, the ability and ease of selling your home during a divorce is dependent on the intentions of the partners who are separating and their ability to work together. If the partners had a marriage contract, then the partners will have decided a course of action in advance of unhappy differences.
What is a Matrimonial Home?
A matrimonial home is a property that is ordinarily occupied and owned by the spouses on the day of separation. One or both of the spouses can be the owner(s) on title, and it is still considered a matrimonial home. Unless there are special circumstances, a matrimonial home is divided between the separating spouses.
In a rush to buy or sell? Here are some more blogs to help you out:
- What to Do if You Need to Sell Your Home FAST?
- How to Fire Your Realtor
- How Long Does it Take to Buy a Home in Toronto
What if there is a Marriage Contract?
A marriage contract, sometimes known as a prenuptial agreement or a prenup, is an agreement between two persons agreed upon before marriage or during their marriage. A marriage contract must be in writing, signed by both parties, witnessed, and provide full disclosure and accurate information for it to be a strong and enforceable agreement. If partners have a marriage contract, it may include a clause that indicates how the matrimonial home will be addressed in the event of the spouses’ separation. In such cases this clause will govern how a matrimonial home is dealt with on a separation.
Is a Separation Agreement necessary to sell your home during a divorce?
A separation agreement is not necessary in Ontario to sell a matrimonial home, but it can be helpful as it will outline the details of the sale e.g. who the real estate agent will be and how the proceeds of the sale will be divided. It is not uncommon that a real estate lawyer will require a separation agreement to include a specific clause regarding the division of sale proceeds from the matrimonial home prior to releasing the funds. Without a separation agreement or a court order it may be that the sale proceeds of the home will be held in trust by the couple’s real estate lawyer.
TIP: When separating it is important that the parties identify the date of separation. Knowing the accurate separation date is critical as it impacts many aspects of the separation. Notably it is possible to live “separate and apart” while living in the same house, as courts will consider various factors (such as sharing a bed, attending social events as a couple, preparing/eating food together, etc) to determine if the couple still holds themselves as a couple or live “separate and apart” while residing in the same house.
Curious about selling as a POA? Find out what David has to say about how long it takes a power of attorney to sell a home right here.
Can you buy your ex-partner out of their interest in the home?
A person may be able to buy out their ex-partner’s interest in their home if they are financially able to and the one partner agrees to sell their interest in the home to the other partner.
Should you wait to sell the home until after you are divorced?
Is it better to sell the home during the separation or after they are legally divorced?The short answer is that in most circumstances all of the issues of the separation need to be resolved prior to a court making a divorce order. That said there are good practical benefits to selling a home prior to a divorce order.
A benefit to selling the property soon after separation is that the sale proceeds can be useful for the parties as they navigate their new life circumstances. Whether their share of the proceeds is used as a down payment on a new property, used to cover costs if they are relocating, or to get caught up with payments of debts, receiving the sale proceeds from selling a home during a divorce can be very beneficial to the separating parties.
Still have questions about selling your home? Read these posts next:
- How to Help Your Home Stand Out to Buyers
- Why Your Agent’s Communication Style Matters to Your Home Sale
- How Long Does it Take to Sell a Home in Toronto?
Another benefit of selling the home soon after a separation is the emotional impact this can have. Working through the emotional ties a person has to their home and its connection to the ending-relationship can be a difficult yet cathartic experience. Selling the property can be a massive emotional hurdle for some people and for this to be able to not be dragged out over a long period of time could be beneficial. Property is often one of the biggest marital assets and being able to deal with the division of this asset can feel like a giant step towards sorting out the remaining issues.
While listing the home for sale as soon as possible after a separation is usually a good option, there can be some drawbacks and situations where this is not the case. For example if the market is very slow, or if the ex-partners are in disagreement over every decision in the selling process (which realtor, which price, what repairs to do, etc).
Thank you David Woodside, J.D. from Coach House Law for this post, and providing such in-depth information! Coach House Law | 60 Atlantic Avenue, Suite 200, Toronto | 416.276.5337
So what does this mean for buying and selling?
To sum it up, the decision to sell your house during a divorce is a complex and deeply personal choice that requires careful consideration of various factors. While financial implications are significant, it’s crucial to also weigh the emotional and practical aspects involved. Communicating openly with your ex-spouse, seeking professional advice, and understanding the local real estate market can help you make an informed decision. Ultimately, the key is to prioritize your well-being and long-term financial stability. Selling a house during a divorce may be a challenging process, but with the right support and careful planning, it can be a step towards a new chapter in both parties’ lives.
Do you need to sell your home quickly? Get in touch with us by calling 416-909-1602 or email us directly at hello@getnested.ca.
Our West End Expertise
We know West Toronto like the back of our hands. From real estate to restaurants to neighbourhoods, we have the intel you need to know. Learn more about our local expertise here.
