Welcome to the Tailor Law Podcast, where we explore the legal issues that matter most to families in Ontario. I’m your host, and today we’re diving into an essential and often complex topic: the intersection of real estate and collaborative family law in Ontario. Whether you’re contemplating separation, navigating a divorce, or supporting clients in these transitions, understanding how real estate factors into family law can make a world of difference.
Separation and divorce are emotionally charged experiences, and when real estate is involved, things can get even more complicated. From deciding whether to sell the matrimonial home to understanding joint tenancy and navigating property division, these decisions carry significant legal and financial consequences. In this episode, we’ll explore how collaborative family law offers a cooperative, cost-effective, and efficient alternative to traditional litigation, particularly when real estate is involved.
Let’s start by understanding what collaborative family law is. Collaborative family law is a voluntary dispute resolution process where both parties agree to work together, outside of court, to reach a mutually beneficial separation agreement. Each spouse retains a collaboratively trained lawyer, and often a team of neutral professionals—such as financial specialists and family professionals—are brought in to facilitate discussions and resolve disputes. This process emphasizes open communication, transparency, and problem-solving.
One of the key advantages of collaborative family law is its flexibility. It allows separating couples to tailor solutions to their unique circumstances—something that is particularly valuable when dealing with real estate. Court proceedings are often rigid and adversarial, while collaborative law encourages creative solutions that work for both parties.
Now, let’s discuss one of the most significant real estate issues in family law: the matrimonial home. Under Ontario’s Family Law Act, the matrimonial home is given special treatment. Both spouses have an equal right to possess the matrimonial home, regardless of whose name is on the title. This means that even if only one spouse legally owns the home, the other cannot be forced to leave without a court order or mutual agreement.
A common question we hear is whether spouses should sever a joint tenancy when separating. Joint tenancy means that both owners have equal ownership, and if one passes away, the property automatically transfers to the surviving owner. Severing a joint tenancy converts the ownership to tenants-in-common, allowing each party to control their share of the property, including leaving it to beneficiaries in a will. In a separation, severing joint tenancy can protect an individual’s interest in the property and prevent automatic transfer of ownership. This is a critical step and should be done with the guidance of a family and real estate lawyer.
Another issue that arises is the date of marriage deduction. This deduction allows a spouse to exclude the value of property they owned on the date of marriage from the net family property calculation during separation. However, the matrimonial home is treated differently. If a property owned on the date of marriage becomes the matrimonial home, the owner cannot claim a date of marriage deduction for its value. This can have significant financial implications, so legal advice is crucial.
Let’s also talk about the practicalities of selling the matrimonial home. Should you hire independent or jointly retained real estate counsel? In most cases, jointly retaining a real estate lawyer for the sale can be more efficient and cost-effective, provided both spouses have their own independent family lawyers. However, if trust is an issue, separate real estate lawyers might be necessary.
Who covers the carrying costs of the home if one spouse vacates? Typically, both spouses are responsible for shared expenses like the mortgage, property taxes, and insurance. However, the spouse remaining in the home often covers utilities and day-to-day maintenance. Collaborative family law allows couples to negotiate fair arrangements for these expenses, reducing the risk of conflict.
Can one spouse change the locks on the matrimonial home? Generally, no. Both spouses have equal rights to possession, and changing the locks without consent or a court order is not permitted. However, if one spouse obtains exclusive possession through a court order or mutual agreement, they may change the locks.
Another complex issue is the valuation and sale of the matrimonial home. If spouses can’t agree on the home’s value, they might start with real estate market evaluations or seek a certified appraisal. In cases of continued disagreement, collaborative law allows for neutral third-party professionals to provide unbiased valuations, helping to resolve disputes without resorting to court.
But what happens if one spouse drags their feet on selling the home? Collaborative law professionals can help facilitate discussions and address underlying emotional or financial concerns. If necessary, legal action can be taken under the Partition and Sale Act to force the sale, but collaborative law aims to avoid these contentious outcomes.
For families with multiple properties, it’s important to know that a couple can have more than one matrimonial home. This applies to cottages or vacation properties used by both spouses. These properties are subject to the same equalization rules as the primary residence, making it vital to understand their legal treatment during separation.
We also need to consider notional disposition costs. These are estimated expenses related to selling or transferring assets, including real estate. Factoring in these costs ensures a fair division of property, accounting for potential taxes, realtor fees, and legal expenses.
Lastly, let’s touch on how business valuation intersects with real estate in family law. If a spouse owns a business holding real estate, a Chartered Business Valuator can assess the value of that interest. This valuation can impact property division and support obligations, making professional assessments critical.
In summary, real estate can be one of the most challenging aspects of separation and divorce, but collaborative family law provides a supportive and solution-focused approach. By working with collaboratively trained lawyers and neutral professionals, couples can find fair and creative solutions for property division, ensuring a smoother transition for everyone involved.
If you’re facing separation or divorce and need guidance on navigating real estate issues, Tailor Law is here to help. Our experienced family lawyers in Ontario can provide the advice and support you need to protect your interests and move forward confidently.
Visit TailorLaw.com today to schedule a consultation and learn more about how we can assist you. Thank you for tuning in to the Tailor Law Podcast. Until next time, take care and remember, you’re not alone on this journey.