Can I Sell the Matrimonial Home During a Divorce in Ontario?

One of the most often asked questions is what happens to the matrimonial home when a couple divorces. More succinctly: can I sell matrimonial home during divorce in Ontario? The issue becomes much more prevalent during a global pandemic, when there is much uncertainty in the housing market. This exact issue was decided earlier this summer in the Ontario Court of Justice.

How the Global Pandemic is Impacting Finances During a Divorce

The husband in this case was an eye-doctor, who had to close his two offices during the pandemic. While he will be reopening soon, social distancing will limit the capacity of patients in his offices and thereby reducing his income. He estimated that his income would be cut in half for the year, to about $66,000.

The wife was making over $100,000 prior to separation in 2019, but remains unemployed. She remains in the matrimonial home with the children. She is pursuing post-graduate education and is paying for a nanny.

The matrimonial home has approximately $1,000,000 in equity. The couple also own an investment property that has another $360,000 in equity, though the rent received barely covers the mortgage costs.

The judge noted in this case that the family’s finances were dire prior to separation. Now the husband is making less money and is supporting the matrimonial home and his own residence. Though the husband was ordered to pay child support and spousal support prior to the pandemic, due to his dire financial situation, he has been unable to make those payments.

The husband asked the wife to support his request to the bank to receive relief from making the mortgage payments during the crisis. The wife refused, as she did not want it to impact her credit rating. The husband then asked the wife to consent to the sale of the two properties and the wife refused. The husband then turned to family court to obtain an Order to sell both properties.

Keeping the Children in the Matrimonial Home

The wife opposed the application arguing that the husband was being aggressive with litigation, which wasn’t in the best interests of the children. She further argued that the husband could access savings and investments to meet his current financial obligations. Further, by forcing a real estate sale in a depressed market was financially irresponsible and not child-focused.

Effectively the wife was arguing that the children needed the stability of remaining in the matrimonial home, as that was the only home they knew. Given the current upheaval in their lives with the ongoing divorce, remaining in the matrimonial home was necessary for their well-being and they would be homeless if sold.

The Law on Ordering the Sale of the Matrimonial Home in Ontario

The Judge reviewed the applicable legal principles and concluded that it was the wife (who opposed the sale) that needed to establish a sufficient reason, recognized in law, why the court should exercise its discretion to refuse a sale. The Judge also noted that it is not common for the matrimonial home to be sold so early in the proceedings.

While it may be a preference to have the children remain in the matrimonial home, that is not sufficient legal justification. If the wife were to rely on this argument, she would have had to prove that there would be a negative impact greater than the inevitable adjustments and disruptions from moving and having their parent divorce. Further to this, it was important to note that the sale of a house in the summer may prove to be easier for children in their transition to a new school year.

One final point the Judge considered was the potential prejudice that may be suffered with potential equalization payments or other issues that still need to be decided at trial. Effectively the issue is whether or not the forced sale during a pandemic and uncertain economic times could be remedied at a later time.

Selling the House to Access Equity

Sell matrimonial home during divorce Ontario? Not surprisingly the Judge noted that both parties were arguing financial hardship while they had more than $1.3 million in equity in their real estate. The wife had argued that forcing the sale of the house may cause her and the children to be homeless. This wasn’t a reasonable argument in light of the fact that she would have more than $600,000 to use towards a new purchase.

The Judge also commented that the wife was acting unreasonably by refusing to consent to the sale of the investment property. This would not have had any impact on the children. And further, the wife was misguided in refusing to consent to the mortgage relief. Her concern for her credit rating paled in comparison to potentially losing the home during a bankruptcy.

How to Prove the Need to Sell the Matrimonial Home

There are some lessons that can be learned here. The first is that Justice Pazaratz is very direct in his approach. He stated the following in relation to legal proceedings in a pandemic:

Business as Usual? Gone.

Nonsense as Usual? Here to stay.

As is often the case, both parties were declaring financial ruin to the Court. They added to their financial difficulties by paying lawyers to argue which party is in greater financial distress. A little concession on either side could have saved a lot of time, money and angst.

How do you prove the matrimonial home needs to be sold? You need to prove that it is necessary at the time you are seeking the Order. And if you are opposing it, you need to have tangible evidence to do so. Simply saying that you want stability for the children is not evidence. Likewise, a preference for the home is not evidence. This is the unfortunate situation where financial realities will supersede the emotional ties to the residence.

 

Next Steps…

Sell the matrimonial home during divorce Ontario? Are you looking to sell the matrimonial home or want to oppose its sale? You need legal advice. A small investment in some legal advice makes sense. The value of the matrimonial home can be significant.

Contact Hearty Law or email toronto@heartylaw.ca or ottawa@heartylaw.ca for more information.

Hearty Law serves the Toronto, Ottawa and surrounding communities.

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