September 1st - 2011

Emotions can hinder sale of matrimonial home after a marriage breakdown

You’ll encounter many different situations over the course of your real estate career, but one that can be particularly tricky is the sale of a matrimonial home following a marriage breakdown.

You’ll encounter many different situations over the course of your real estate career, but one that can be particularly tricky is the sale of a matrimonial home following a marriage breakdown.

“These types of transactions are full of emotion -- lots of anger and mistrust,” says Ian Smith, a real estate broker from Courtice, Ont. “I’ve had situations when a husband leaves the marriage and moves in with a new girlfriend while the wife, who is a stay-at-home mom, remains in the matrimonial home. The husband sometimes wants to sell the house and get on with his new life, while the wife doesn’t want to sell. These situations can be difficult and frustrating for everyone involved.”

A matrimonial home is considered a unique asset vital to a family’s well-being, so it is treated differently from other types of property and falls under the Family Law Act (FLA).

The act recognizes spousal equality within a marriage and provides for the orderly and equitable settlement of spousal affairs after a marital breakdown, as well as for other mutual obligations within family relationships. The FLA stipulates that, when a marriage ends, the full value of the matrimonial home must be shared, even if one spouse owned the same home before marriage, received it as a gift, or inherited it – unless a valid marriage contract states otherwise. Note, however, that a marriage contract cannot limit or block other matrimonial home rights covered under Part II of the act, such as equal possession and consent to sell or encumber.

“Selling a matrimonial home when a couple splits up is probably the most difficult real estate transaction there is,” says Smith. “You must practice extreme due diligence, paying careful attention to every detail and going through every clause and all the fine print with your clients to ensure that they understand. And -- you may have to do it all twice if you can’t get the sellers into the same room together.”

When dealing with transactions involving a matrimonial home, registrants should urge expert legal advice for any questions about rights, obligations and requirements under the FLA, and for any issues or disputes regarding spousal consents or the definition or designation of a matrimonial home. Note that Section 8 of the REBBA 2002 Code of Ethics requires registrants to advise clients and customers to seek services from others if they do not have the knowledge, skill, competence or legal authority to provide such services.

When listing and selling a property, all registered owners must sign the listing agreement, the agreement of purchase and sale (APS) and all related documents. Most residential properties are owned by both spouses jointly. If both spouses are on title as owners of the property (any property -- whether it be a matrimonial home or another property), both spouses are shown as owners and sellers throughout the transaction. Ensure that both spouses sign the listing agreement, the APS and other related documents. Problems will arise if any owners’ signatures are missing from these documents.

If only one spouse is on title as the registered owner of a matrimonial home, the owner-spouse is shown as the seller throughout the transaction. However, the non-owner spouse will need to consent to the listing and transaction and sign the listing agreement, any amendments to the listing, the APS and other transaction documents such as the deed/transfer in order to confirm that consent. Both spouses would also initial any changes made during the offer and counter-offer negotiating process.

If you have any doubt about whether a property is a matrimonial home, requiring spousal consent to a sale, assume that it does unless you have appropriate documentation under the FLA or a court order stating otherwise.

Smith’s advice to REALTORS® involved in the sale of a matrimonial home after a marriage breaks down is to be patient and try to understand the position of each party and what they want out of the process. “Your role is to be a facilitator who tries to keep the lines of communication open, but don’t try to be a lawyer. If your clients need independent legal advice, you must step back and refer them to lawyers.”

Although listing and selling a matrimonial home after a marriage breakdown is often challenging for real estate professionals, Smith says it can also be rewarding. “If you do a good and thorough job, you could end up with two great clients for life.”

Be prepared and avoid the pitfalls surrounding the sale of matrimonial homes by learning about the FLA and always urge expert legal advice. For more information, be sure to check out the OREApedia topic, “Matrimonial Homes, Spousal Consent” in the Members Only section of the OREA website.

“Spouses” under the act, including Part II - Matrimonial Home, are persons who are married to each other. (In Ontario, this includes same-sex couples who have married in a legal ceremony.) However, if two people are registered on title as property owners, even if they don’t fall under the definition of spouse, they are both still owners of the property with all the rights of owners, and therefore must be included in listing agreements, the Agreement of Purchase and Sale, and other documents. People in common-law relationships may be entitled support payments or repayments for contributions to the property based on trust law principles. Expert legal advice is needed to deal with these types of issues.

The Family Law Act can be found on the Ontario e-Laws website at www.e-laws.gov.on.ca. Click on the black box titled “Search or Browse Current Consolidated Law” and type “matrimonial home” in the search box.

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Jean-Adrien Delicano

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