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Keeping the matrimonial home in divorce: what to consider

by Anita Phillips

One of the biggest dilemmas facing many divorcing couples is what to do with the matrimonial home —and the current economic climate is not making that decision any easier.

For couples with younger children, it’s important to consider the effect that moving will have on them. Children have connections to the home, the neighbourhood and the school they attend. Keeping the matrimonial home can bring significant value to their lives.

But even if there are no children living at home, rising inflation and a volatile housing market are making the choice to sell or keep the family home a thorny one for many separating couples.

Before making any decisions, it’s important to first look at the value of the property. To do that, you can either: 

  • Hire an accredited real estate appraiser to value the home for sale purposes (not for financing purposes). Many divorcing couples agree to share the cost of an appraisal of their home
  • Ask three or more real estate agents to provide their opinions on the value of the home.

Creative financing solutions

After determining the value of the home, you can talk to your bank or mortgage broker about financing options. If you want to purchase your spouse’s interest in the home, you will need to find out if you can qualify for an increased mortgage on your income alone.

A growing trend involves one spouse buying out the other’s interest with money they received from their parents. Sometimes a spouse’s parent contributes money in the form of a gift or an early inheritance to allow their son or daughter to keep their home in a divorce. In other instances, they might co-sign the new mortgage for their son or daughter. 

Child-focused options

If buying out your spouse isn’t an option, there are other ways couples have kept the matrimonial home.

Some divorcing couples, particularly those with children who are highly motivated to work together cooperatively, may decide to continue owning the home together, with both spouses remaining on title to both the home and mortgage. Often, these situations occur in families with school-age children. Here are some of the options:

1. A nesting scenario involves the children continuing to live in the matrimonial home while the spouses go back and forth between the matrimonial home and a second property the couple owns or rents together. In this nesting arrangement, the cost of both homes is usually shared between the spouses. The second property doesn’t have to be big enough for the children and is, therefore, more affordable.

2. A second scenario where both parents stay on title to the matrimonial home involves one parent remaining in the family home while the other moves to a rental property. The children divide their time between the homes and the costs of both the matrimonial home and the rental property are shared. This option allows both spouses to remain invested in the real estate market with minimal disruption to the children’s lives.

3. A third option involves both spouses remaining in the matrimonial home, and agreeing to renovate the space to accommodate one spouse moving to a separate area of the property, such as a basement apartment. In this scenario, both spouses have their own spaces, and the children can see either parent whenever they like.

But first, a legal agreement

While nesting arrangements can help smooth the transition for children, they can also create new logistical challenges for the parents, and potential conflict.

It is critical to consult a family law lawyer and execute an agreement that sets clear expectations for both parties, stating who will be responsible for what as well as other critical details about the arrangement. Given the matrimonial home is the largest asset most people own, it is vital to ensure your interest in it is protected by formalizing your arrangement.

It’s important to think about the type of relationship you have with your former spouse. Ask yourself whether this can actually work. Owning property with someone that you’re no longer living with and with whom you’re no longer in a relationship will be challenging. Both spouses need to be really committed to making the arrangement they choose work for their family.

It’s best to think of the issues carefully and always consult a lawyer when deciding about property in a divorce. Schedule a consultation with me if you would like to discuss your options.

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by Anita Phillips

Anita Phillips has extensive experience as a family and estate law lawyer. She has particular expertise in negotiating and drafting domestic contracts and in developing estate plans for clients with blended families and for business owners.