Can I be forced to sell my house in a divorce?
One of the toughest decisions to be made when going through a separation or divorce is what happens to the family residence. For many spouses, the matrimonial home is their largest asset, not to mention a source of security and stability for themselves and their children. What happens when your spouse wants the home sold and you do not? In certain situations, you can be forced to sell your house in a divorce.
What do you need to know about dividing family property and debt?
After married or common-law spouses separate, family property and debt must be divided. Family property includes your family residence and family debt includes the mortgage, if any, on your family residence. Each spouse lists and totals the value all assets and debt owned on the date of separation. The spouse with the higher total must pay an “equalization payment” to the spouse with the lower total. The purpose of the equalization payment is to put both spouses on equal footing when leaving the relationship. The division of family property and debt can be achieved by written separation agreement between the spouses or by court order. For more on how assets are divided in a divorce, read this article or reach out to our divorce lawyer in Prince George.
What are your options for dealing with the family residence after separation?
There are several options available to separating spouses, depending on their needs and finances. The two most common options for the family home are as follows:
- Both spouses may agree to sell the home to a third party and divide the proceeds of sale. Spouses may agree to list the property for sale because neither spouse wants to keep it, or because neither spouse can afford to keep it. If the spouses have not yet resolved all family property and debt issues when the home sells, some or all of the proceeds of sale can be held in trust in a lawyer’s account until a separation agreement or court order is obtained.
- One spouse keeps the home. The spouses agree on the value of the property (or ask the court to determine the value if they can’t agree). The spouse keeping the property buys out the other spouse’s interest. This can be done by refinancing/borrowing money, or as part of the overall equalization of assets. Title to the property is transferred to the sole name of the spouse who purchased the other spouse’s interest.
- One spouse keeps the home in exchange for waiving their rights to a share of divisible assets of
the other spouse (for example, Employment Pension, CPP, RRSPs, TFSAs, other investments and family property, including vehicles). In this case, the other spouse walks away from the family home but keeps the value of their retirement assets and/or other family property.
Remember, however, that all family property and family debt must be dealt with on separation. The spouses must equalize the property between them by the spouse with the higher total value paying the difference to the other spouse. Option #2 may not be viable if there is substantial equity in the home and/or the equalization payment is too big. In other words, you may have no choice but to sell the property—even if you and your spouse agree you should keep it—if you can’t secure financing, or if you realistically can’t afford to carry the expense and maintenance of the home on your own.
Can your spouse force sale of your home before you have a final agreement or order?
Whether division of family property issues are resolved by separation agreement or court order, the process can take some time. The reality is that a significant portion of each spouse’s net worth is locked up in the family residence in the meantime. Your spouse may want to sell the home before issues are resolved on a final basis for many reasons (e.g., because the mortgage is too expensive; because he or she needs their equity in the jointly owned property to purchase a new residence; or because the real estate market is strong). Here is what you need to know if your spouse wants to sell the property on an interim basis, but you do not agree:
- Your spouse can’t list the family residence for sale without your consent. This is true even if title to the property is in only in your spouse’s name (i.e., not jointly owned by both of you). The BC Family Law Act has special rules for the home that is your ordinary place of residence.
- Your spouse can start a family law case by filing a Notice of Family Claim, and then bring an application for an order that the property be sold. BC courts have the power to order interim sale of property, regardless of whether the spouses consent, under Rule 15-8 of the BC Supreme Court Family Rules. The Court has broad powers, including the power to fix the sale price, to appoint a real estate agent, to accept an offer if one of the spouses will not consent to a reasonable offer put forward by a third party, and to order that one spouse have sole conduct of the sale.
If your name is not on title to the family residence, there are ways to protect your interest. It is strongly recommended that you reach out to our family lawyer without delay if this situation applies to you. If a family law case has been started, you can register a certificate of pending litigation (“CPL”) against title to the property, which notifies any potential buyer that ownership of the home is in dispute. If litigation has not been commenced, BC’s Land (Spouse Protection) Act offers a protection similar to a CPL.
Need advice on preventing sale of your house in a divorce?
Dick Byl Law Corporation has guided clients through the challenging process of separation and divorce for nearly 40 years. It is so important to be prepared and understand your rights under divorce law. Reach out to book an appointment today. Our divorce lawyer will explain your rights and explore your options for avoiding forced sale of your home.