By Marian Gage
The cost of housing has become a big issue for families who separate in Halton. It seeps into almost every negotiation or mediation as an issue…a challenge…a jackpot…depending on the family members’ goals.
To be clear, the law has not changed. It’s the other stuff that changes now – the decisions people make when they separate and the options available to people who are now looking to live in separate homes.
For those of us who work in Collaborative Practice and family mediation it’s all very significant. Our clients’ mutual goals are at the root of these processes. Goals such as:
- Residing in the same school catchment area so the children don’t have to change schools;
- Both parents residing near each other to accommodate a shared parenting schedule; and
- Maintaining homes with similar standards so the children feel “at home” in both parents’ residences.
Often, one parent will purchase the other parent’s interest in a matrimonial home to allow the children to remain in the neighbourhood. These days we’re seeing house prices so high that it’s not as easy for a newly-single parent to finance that kind of a “buy-out.”
We’re seeing situations where it might have been easy enough for one spouse to purchase the other’s interest on the day they separated, but six months later (it can take a number of months to get from the point of deciding to separate to the point where these decisions are made) that house might sell for substantially more if it were listed on the market.
I’ve reached out to Collaborative family professionals and mediators to learn about some of the solutions their clients have come up with to try to meet their goals when it comes to the family home. In many of these situations, it’s not what a judge would do (you can talk to your lawyer about what a judge would have to do – they are bound by the law).
Here are some of those solutions:
Right of first refusal on sale
In some cases, one keeps the house and the other holds a “right of first refusal” where he or she would have the first opportunity to purchase the property before it is listed for sale. I am advised that in these cases the party with this right has not exercised it and the property has been sold on the open market.
Continued joint ownership with minimal draw
In one case a separated spouse agreed to sell her share of the equity in the home to her former spouse based on a mutually agreed amount, however, the “selling” spouse was only taking what she needed to satisfy the down payment on her new home. For the balance owing, they signed a promissory note which paid the “selling” spouse the greater of a percentage of a future sale price proportionate to the amount owing, or simple interest at 5 per cent per year for the outstanding amount to a maximum number of years in the future.
In some cases separated spouses are agreeing to remain on title, although only one will remain in the home. They may come up with a plan to determine whether there will be continued contribution to mortgage payments and (in some cases) other operating costs. They agree on a time frame for the sale.
Certified appraisers will value the property (separated spouses may choose to retain one neutral appraiser who works for both of them, or in some cases they work with more than one appraiser and establish a mid-point). One spouse would purchase the other’s 50 per cent interest.
There have been other cases where separated spouses have considered obtaining a valuation at the date of separation and a valuation at the current date to determine the percentage increase in value from separation to the date they were ready to address the issue, and then agree on some amount in between taking into account commission fees, etc.
The issue with the formal valuations now seems to be that many houses are selling above what certified appraisers would value as their worth.
There have been still other cases where parties have agreed not to use the price at which they anticipate the house could be sold and instead one party has agreed to transfer his or her interest to the other for less than the expected “market value” so children can remain in the home.
Sale on the open market
There have a been a number of cases where the house was simple listed and sold for a lot of money. For some, the parties were happy to see how much they would receive from the sale of their home. For others, it was disappointing as one former spouse had hoped to purchase the other’s interest (they simply could not settle on an appropriate price).
The difficulty, then, is that everybody needs a place to live and it’s not an ideal time to purchase one home, let alone two.
I often advise my clients to seek the assistance of a Financial Divorce Specialist who can help them see their options and make sound financial decisions that work within their budgets.
As always, when parties are working in a Collaborative process, or in mediation, there are far more options available and it’s much more likely that a family will end up with the arrangement that works best for all.
Disclaimer: This article is only intended for information purposes and is not intended to be construed as legal advice.
Marian G. Gage, B.J., LL.B., Acc.FM (OAFM), CS (LSUC)
Certified Specialist in Family Law
165 Cross Avenue Suite 301, Oakville, ON L6J 0A9
Tel: 905-338-7941 ext 229