Separating in Ontario—sell the matrimonial home or choose a spousal buyout to keep it, cut costs, and maintain stability for your kids?
What counts as the “matrimonial home” in Ontario?
The matrimonial home is the residence where a married couple resides together during a marriage and is afforded special legal status in Ontario Family Law. Specifically, when a married couple separates, they both have an equal right to live in the home, regardless of ownership and its value at the date of separation is shared equally, even if one spouse brought it into the marriage when the separating parties are dividing their assets.
What is a matrimonial (spousal) buyout?
When a couple is going through a separation, it is often the case that the matrimonial home must be listed and sold. However, one option parties may consider is a matrimonial or spousal buyout. This is essentially an arrangement where one party buys out the other’s ownership stake in jointly owned property.
Why consider a buyout: keep the home, save costs, stability for kids
The primary benefit of the spousal buyout is that it allows one party to keep the home. The party who buys out the other would assume full ownership of the home and the other would receive financial compensation for their share. This means the parties do not need to list and sell their home and rely upon a sometimes-unpredictable real estate market. Another consideration is that selling and buying on the open market is generally less cost effective than the spousal buyout as parties save on real estate fees, moving fees and land transfer tax. The last notable benefit is that this arrangement allows for consistency and continuity when there are children involved in a separation. This is because it is often in the children’s best interest to stay in the property, community and school district that they were raised in.
What to watch for: agreement, mortgage qualification, legal help
Importantly, there is no legal obligation or right to be able to buy out your spouse’s interest in the matrimonial home and so this must be mutually agreed upon by both spouses. Also, the spouse buying out the other must qualify for a new mortgage and this can be challenging depending on their financial situation so parties should ensure that this is a feasible option before agreeing to go this route. Parties should seek legal counsel to assist with a matrimonial buyout as this is a complicated process and oftentimes forms part of a larger settlement involving the division of other assets.
Need guidance? Contact Boardwalk Law LLP
The experienced Family Law Team at Boardwalk Law LLP is happy to help with your separation/divorce or family law issues. Please contact Alex Cannon, Associate Lawyer at [email protected] / 905.288.7109 to book a consultation today.
