Untying the knot around the matrimonial home

BY JAY BRIJPAUL

I came across a cartoon of a milking cow, a couple, and two lawyers, where one spouse was pulling the head of the cow in one direction and, the other, yanking at the tail. The lawyers sat in the middle milking away. The matrimonial home is usually the biggest asset and untying the knot is tough. A matrimonial home is where the family resides.

For a property to be considered a matrimonial home, the couple must be “joined in holy matrimony” and live in that home. It does not matter who is on title. If the home was an inheritance or gifted and is used as the family home, both spouses still have equal rights unless there is a written agreement.  For example, consider John who inherited $60,000 and used it to upgrade the family home. He tried to claim that amount back when the home was sold but lost because it was used to update the family home.

With divorce, there is equalization. Both parties will add up their assets and subtract their debts and arrive at their final net worth. The spouse with the higher net worth would then give half of the difference to the other. For common law, what’s yours stays as yours. There are instances where a family spends substantial amounts of time at a family cottage and that can be considered as a secondary matrimonial home.

Picture Jackie, whose divorce was galling. She left home three years ago, and her ex argued that the family home was no longer a matrimonial home. He was the only one on the  title. Fortunately, they had lived in the home for ten years prior to their separation and the court considered that as substantial. There are a few options when disposing of the family home. One spouse can buy the other over, or the home is sold. In some instances, both parties may elect to keep the home so that their children’s lives are not disrupted.

If one party needs to buy the other out, then, they must be financially capable. Caroline planned on keeping the family home and would arrange to pay her ex, Ricardo. The home was worth $600,000 with a remaining mortgage of $200,000. As such, for Caroline to buy the home over, she must pay Ricardo $200,000. Her only option is to increase the mortgage to $400,000. Since Ricardo would be removed from title, Caroline would need to qualify on her own. With a single income, higher mortgage payments and all the cost associated with homeownership, Caroline must be careful.

In the event of sale, both parties can elect to use a realtor of their choice. If both parties cannot agree on a realtor, then the court will assign one. Divorces are usually bitter with explosive crossfires. More conflicts mean higher court costs and escalating lawyer fees. Both spouses can elect to use their own realtor and the two realtors can work together. If you are planning on selling, avoid renewing the mortgage or try to sell when the term is about to expire and avoid discharge penalties. If both parties cannot agree to sell, then, one party can apply for a court order. That party can sell, and the proceeds remain in the real estate lawyer’s trust account until a settlement is reached.

Jack and Jill went up a hill. Jack got a restraining order and cannot visit the family home. Jill, with the two children, stayed in the family home. The court ordered Jack to pay the mortgage and property tax. He was fuming because in addition to the court order, he must pay for his accommodation elsewhere. Eventually, the court ordered the home to be sold and Jill was uncooperative. She deliberately kept the home dirty and less appealing and as a result, the home remained on the market for a longer period and sold well below market value. Jack and Jill took a financial tumble.

Dan and David untied the knot and sold their home. They ironed out a fair arrangement, interviewed a few realtors and sold their home. On moving day, they assisted each other, hugged and moved on. Dan and David are better off financially.

It is smart to have a prenuptial or postnuptial agreement in place because we never know what the future beholds. Many newlyweds fail to address this important issue. Tying the knot is sweet but untying it is sour.