Part One: Real Estate & Divorce | The Family Home
(3 min 24 sec read)
The family home, also known as the matrimonial home is the place where the married couple (and their kids if so is the case) were residing when the separation or divorce was initiated. Unlike with other property brought into the relationship the family home is considered 50/50, regardless of who owned the home when the marriage took place, or whose names are on the mortgage papers.
But, what happens if one spouse wants to keep the family home? What happens to the mortgage? If one spouse decides that they want to keep the family home there are a few ways the situation can be handled.
Buy Out Your Ex
The option to buy out your ex is not a cheap one, but it is a popular one for those with the means to do it. Buying out an ex-means that you will buy out their equity in the family home. Keep in mind, doing this also means that you are also responsible for making the mortgage payments. Generally doing this can be done in one of two ways, you can either refinance the already existing mortgage or you can assume the mortgage that is already in place, continuing to make the already determined payments.
Assume the Mortgage
Another option is to assume the current mortgage. This option involves quite a bit of paperwork, including a release of liability which releases your ex of any financial responsibility to the property. You will also have to prove to your current mortgage lender that you can take on the regular mortgage payments yourself. It should be noted that not all mortgages are assumable, so you will have to discuss what your options are with your bank.
Refinance the Mortgage
This is kind of a best of both worlds approach to keeping the family home. Refinancing means that you will still have to buy out your exes’ equity in the home, however, it also means that you are going to make adjustments to your mortgage to (ideally) make it more affordable.
When it comes to real estate and the way that it is divided up amongst Americans who are going through a divorce, things are a little bit different, although there are still similarities. For example, if a home was purchased by one of the parties prior to the marriage it might be considered a pre-marital asset. In many cases, this would mean that the house would likely remain the property of the original owner. However, if the house was used as the marital home, or was rented out as a source of marital income, the property is then considered to be a marital asset.
According to Statistics Canada, approximately 41% of all marriages end in divorce before their 30th anniversary. With such a high number of marriages ending in divorce, it is no wonder that so many people worry about what their situation will be like should their marriage come to an end. Many people are surprised to find out that every territory and province has its own laws and regulations regarding the division or equalization of marital property. In other words, if you live in Alberta, the situation you end up with could very well end up being different than what it would be if you lived in Newfoundland or The Yukon.
Because of these varying regulations, it can be tough to pinpoint specifics that will apply regardless of where in the country you live. However, there are a number of general practices that apply throughout the country. For example, regardless of where in Canada you live, in the eyes of the law, marriage is a partnership where each party is 50/50. This means that regardless of whether a spouse works outside of the home, or stays home with the kids their contribution is equally as important as the other. Therefore, should the couple divorce the property is to be divided as such. Both parties keep whatever they enter the relationship with, however, any increases to the value of the property that occurred during the married must be split evenly.