Who gets the family home when a marriage breaks down?

Who gets the family home when a marriage breaks down?

  

When a marriage breaks down, one of the major questions for a couple is how to deal with the matrimonial home. On the one hand, there may be a desire for one spouse to stay in the home with the children, to provide some family stability. However, due to the tax advantages relating to the matrimonial home, legal advice should be sought before making any decisions.

As the attached article indicates, there are many issues, including division of assets, support and taxation that will have to be determined.

  

Original article from Real Estate Expert and Lawyer, Mark Weisleder's article. Also important to know and protect yourselves somehow even before purchasing the home. See some examples below:

• if you were single individuals and already owned homes independently - why not keep them and instead of selling - rent them out. This way they become and investment or a house to fall back on
• speak with a real estate lawyer before you get married to determine how title should be registered

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.

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 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.

About Mark Weisleder

Mark is a lawyer, author, instructor, Toronto Star columnist  and keynote speaker for the real estate industry. 

Mark Weisleder

62 Hillmount Ave. Toronto, Ontario,M6B 1X4

(416) 702-2499

170 Wilkinson Rd., Brampton, Ontario, L6T 4Z5

(905) 454-9606