Negotiation is integral to resolving issues after a separation. When it comes to jointly-owned homes, successful negotiation may be the only path that enables one spouse/partner to keep the home.
Options for the Matrimonial Home After a Separation
The Ontario Court of Appeal has held that the court does not have jurisdiction to order that one spouse convey his or her interest to the other, or to grant a right of first refusal. However, the court does have power to order the sale of the home, as long as the home is not in a foreign jurisdiction. If parties are not able to successfully negotiate the transfer of interest in the jointly owned home from one party to the other, there is a real risk that the home will have to be sold and neither party will be able to retain it.
One rationale behind this limitation is that a joint-owner has the right to receive fair market value for his or her interest in the property. The true test for fair market value is by way of sale in the open market, which may result in a higher value than the appraised value of the property, particularly in today’s climate. Either spouse may bid on the property once it has been listed for sale, but there is no guarantee that the other will accept the offer and there is no guarantee that the courts will force sale to the other party, as opposed to an independent bidder.
Courts have occasionally made orders allowing one spouse to purchase the other spouse’s interest or to bid on the property prior to listing, but this approach is inconsistent with other cases and with the legislation and as such, there is a real risk that relying on the courts to assist when negotiations break down, will result in the sale of the home.
Consider Getting a Marriage Contract or Cohabitation Agreement
A marriage contract or cohabitation agreement at the time of a house purchase that carefully addresses how the home will be dealt with after the breakdown of a relationship is a useful way to avoid the necessity for post separation negotiations or a court ordered sale of your home.
Please do not hesitate to contact the Toronto family lawyers at Mills & Mills LLP should you have questions as to how you might protect your interests on separation. Reach out online or at (416) 863-0125.
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