A lot of people come to me asking for direction when it comes to divorce in Toronto and/or separation. I get it. Divorce is a lonely, scary road in the beginning, and I’ve been down it. And when it happens to you, it’s hard to admit to yourself that it’s really happening, much less reach out to others for advice. I’ll be really honest with you – for me, in the beginning, it felt emotionally like I was glued to the floor and couldn’t get up.
Suffice to say that this isn’t the easiest topic to talk about, but as it relates to real estate, it’s one I feel has been woefully under-explored.
It’s understandable. When a couple is caught up in the excitement of purchasing a home together, odds are they aren’t thinking about what will happen if they don’t end up actually living in it together at some point.
Even when someone has crossed all of their t’s and dotted all of their i’s with thorough paperwork in preparation for possible separation, this doesn’t necessarily negate other important factors like children, money, and not to mention the obvious emotional toll.
Unfortunately, around 40% of Canadian marriages end in divorce. Being that I’m part of that statistic, I’m familiar with some of the steps you will need to take with your home during this difficult time.
Understand Your Rights
If you or your spouse is asking for, or you have mutually decided to get divorced, my first recommendation is to talk to a lawyer to understand your rights. Talking to a lawyer doesn’t have to be a scary thing, nor does it hammer the nail in the divorce coffin. The best advice I was later given, was to talk to someone who was a professional instead of spend hours reading online. A five-star rating for one lawyer does NOT make them the best. A mediator or a family lawyer is your best first call. Please reach out if you are in need of a name or two.
The Matrimonial Home
The home you share and the one you are in upon separation is called the matrimonial home. It doesn’t matter who’s on title, who put more money down or anything of the sort. That house is owned and to be divided equally.
This is an exception to everything else at the time of divorce essentially dividing all assets that were accumulated during the marriage. You calculate your net assets on the date of marriage, and again on the date of separation, then arrive at what is referred to as your net family property. Your spouse then does the same calculation. Whoever has the highest net family property makes a payment to the other spouse to equalize the amounts. This payment is known as an equalization payment.
But back to the house. Whether you sell it or not, you’ll likely need take action on it, unless you and your ex remain amicable, decide to hang in it together for awhile longer and extend the separation time.
Get An Appraisal And/Or A Letter Of Opinion
The first step to take in regards to the home is to get an appraisal from a bank or a certified appraiser. Looking for a recommendation? Don’t hesitate to email me for some names. Many appraisers can lean towards a more conservative valuation. However, the information provided in this assessment is commonly relied on if matters surrounding the home and the divorce end up in court.
Each of you can additionally seek the opinion of a real estate agent and get a market analysis or letter of option. This assessment would be completed by a local realtor, if in Toronto, someone like myself, and rely on an analysis of the market value and market conditions based on past sales. Most agents will not charge you for this. You can compare and contrast the two in addition to the bank appraiser.
Can You Afford It On Your Own?
Following the appraisal, you have to figure out who can actually afford to buy the other out — and if they even want to — or whether you’d prefer to liquidate and divide the equity of the asset. Each spouse will need to verify with a mortgage broker, or their lending bank, to confirm they will qualify for a mortgage on their own.
Need a referral of a mortgage broker? Again, just ask.
If You Decide To Sell The Property
If you’re going to sell the property and liquidate the assets, mutually decide to interview each of your choices of a realtor. Select one together that is going to remove themselves from any drama or favouritism, and who will communicate clearly to both of you.
Location, location, location is the old real estate adage, but when it comes to real estate and divorce, the most important thing to keep in mind is communication, communication, communication. The best rules for agents are to never pick sides, and to ensure that any important meetings are held either in person or by phone with all parties involved.
Getting The Home Ready For Sale
Yes, getting a home ready for sale following a divorce is emotional. There’s nothing less fun than splitting up possessions that you both want, decluttering happy memories in a no-longer-happy state and doing so in the company of someone who doesn’t want to necessarily be in your company.
I know this is difficult. If you can’t be in the same room together, communicate that to your agent. They can help act as a mediator (I have joined in and helped with the de-cluttering myself), or your Realtor can bring people in to pack up for you.
In terms of paperwork, there are many parts to the offer that already are legal and binding necessities. For example, if both parties are actually on the title then the sale has to be done with the signature and acceptance of all parties. And if not on title, but still married and this is the matrimonial home, there is a space where the non-owner spouse has to sign off on the sale.
You best open up and be communicative together.
Keep The Divorce As Professional As Possible
Generally speaking, I will encourage clients to keep their divorce personal and confidential. Don’t broadcast your split to the neighbours. For the most part, it’s not necessary to share the situation, and it’s often better to be vague and imply downsizing so prospective buyers don’t try to capitalize on your we-want-to-sell-fast desire.
Motivation is a key part of selling any property and if the prospective buyers get wind of the reason the place is on the market, this can potentially be used against you in negotiations. Also, some buyers believe that a house where people are splitting up has bad karma, which can also create a negative sales impact.
My advice for those facing questions around motivation to sell is to talk about how much they have loved the property, and stick with the truth without elaborating too much.
After all, selling a property isn’t easy as it is, especially when you don’t want to sell it or you’re selling memories of a better time. My best advice is to remain open, communicative and disengaged from the materialistic side of things.
Don’t be so quick, either, to think everything your ex says is wrong or harmful to you. It took me a long time to realize that the person I disliked so much was the person I once was in love with. If you can remember that nugget, the selling process will be so much easier.
Moving On, On Your Own
Finally, once the house is sold, or someone is bought out, chances are one or both of you needs to find a place to live. If you are dead set on staying in a neighbourhood and the divorce is beyond the point of separation, perhaps purchasing is in the books for you.
If such is the case, please ask to be put in touch with a mortgage broker or bank lender to find out your purchasing power. You can then reach out to me to find out what is possible. If buying is not an option right now, or if you’d like to take a break and settle yourself in something more temporary, talk to me about rental options. Been there, done that.
To conclude, I have helped many divorced couples sell, buy and rent. I have great empathy for anyone going through such a situation. I will not be the person to talk to to bash your ex to, but I am someone to hold your hand and show you that you can, and will, get through this.