The following article will explain what a matrimonial home is and the options available to separating spouses. Please note that this article is intended as a brief overview; when seeking personalized advice, it is best to consult a legal representative.
Generally referred to as the family home, the matrimonial home represents the residence where married spouses live before the separation date. As long as there is no contract stating what will happen upon separation, both parties have equal rights to the property. Considering the significant investment of resources and emotion involved in matrimonial homes, much debate surrounds them.
Separation agreements are enforced when a couple has reached the point where they wish to separate. A separation agreement will outline what will happen to the family home.
Separation agreements in Ontario are agreements between two spouses to live apart without ending their marriage legally. Separation agreements allow both parties to remain in the matrimonial home until further proceedings are completed. While assessing whether spouses live apart, the court will consider whether they share a bedroom, are intimate with each other, attend social events together, and follow similar routines before the separation.
It is common to determine what to do after separation when it comes to the matrimonial home by selling the house and dividing up the proceeds or by transferring the title to the individual who purchases the interest of the other, also known as a spousal buyout mortgage.
As a result of the latter option, you will need the assistance of a real estate lawyer to prepare all necessary documentation and advise you of any risks you are exposed to, as well as of your rights and responsibilities. However, if there is a mortgage on the matrimonial home, the spouse who remains on title needs to arrange for a new mortgage only in their name (also called a refinance). The proceeds of the new mortgage will be used to pay the old mortgage and the departing spouse’s share.
Key factors to consider in the process:
- Who should keep the home and who is leaving?
- A separation agreement needs to be signed prior to the transfer/refinance date in almost all cases, even when the separation is very amicable. Therefore, consulting family lawyers ahead of time is very advisable.
- A buyout often means one of the spouses needs to refinance the home to buy out the other spouse. That means that the spouse who wants to buy out the departing spouse needs to qualify for a new mortgage only in their name and a mortgage broker should be consulted at the earliest opportunity.
- Key considerations are:
- The repayment of the existing mortgage or line of credit and any other debt of the couple
- Whether the remaining spouse has good credit rating and a sufficient income to buy out the other spouse
- Whether a separation agreement has been signed
- Whether the requirements and payments of a new mortgage in the remaining spouse’s sole name can be met
Pursuing a buyout option has numerous advantages, including eliminating moving costs, real estate agent commissions, land transfer fees, and other fees. Please do not hesitate to contact RMS Estates if you or a loved one are considering intelligent strategies for managing the matrimonial home.
PLEASE NOTE THAT THE CONTENT OF THIS BLOG IS MERELY FOR INFORMATION PURPOSES AND DOES NOT CONSTITUTE LEGAL ADVICE.
