August 14th, 2024 | Buying

The Ultimate Guide to Buying and Selling During a Separation or Divorce

Buying or selling a home is often an exciting venture. In many cases, it represents a milestone or a well-deserved achievement and is usually a cause for celebration. However, as much as we would love all home purchasing transactions to be inspired by a joyful event, it isn’t always the case.

Selling or moving due to a separation or divorce is a situation that people don’t want to think about – let alone talk about. However, if it happens, you’ll want to do everything possible to make the real estate transactions required, as easy as possible.

The first thing you need to do is get the right guidance to help you move through each step with minimal stress or disruption to your life. For that, you’ll need some legal advice. We are not lawyers, but the Chell Team can certainly recommend an experienced professional if you need one!

What we will do when we hear from you, is provide professional real estate advice and help you streamline the transition from your old life to the new. Our step-by-step guide to buying and selling during a separation is a must read should you find yourself facing this difficult transition.

First Things First

In the immediate period following separation, there may be a tendency to make snap decisions based on emotions. Needless to say, this may not be the best thing for you or your family in the long run.

For example, suppose you find yourself in need of immediate housing. You might feel pressured to settle for something quickly, only to find yourself in a less-than-ideal situation. This is where you want to slow down and take a breath, and maybe even connect with your real estate agent for some advice.

In this case, a temporary living arrangement can take the pressure off and allow you time to make an informed choice after you’ve had a chance to assess your resources. Or you might be able to stay with friends and family who provide a little extra support. Few things can help you through better than having a shoulder to lean on and someone to talk to.

No matter what, there is a workaround to most situations. The path isn’t always clear right from the beginning. It will help to surround yourself with people you trust as you weigh your options and decide where to go from here.

Real estate transactions can be sensitive, not just during a separation. The resources below will help you be prepared for anything:

Separating What Do We Do With The Family Home

Understand Each Other’s Rights

Knowing what rights you and your former partner have can help you move forward as peacefully as possible. Unless spouses have a marriage contract setting out what happens to the matrimonial home upon the breakdown of the marriage, the special rules set out in the Family Law Act apply. Regardless of whose name is on the deed, each spouse has an equal interest in the matrimonial home. Under section 18(1) of the Family Law Act, “Every property in which a person has an interest and that is or, if the spouses have separated, was at the time of separation ordinarily occupied by the person and his or her spouse as their family residence is their matrimonial home” R.5.0. 1990, c.F.3,s.18(1).

This means that if you were living in the home at the time of separation and have a vested interest in it, that property is considered the matrimonial home. This definition also includes rental and lease homes. If your partner has a lease agreement in their name but you reside there with them, it is still considered the matrimonial home.

This definition also includes other properties, like summer cottages, for instance. There is no “yours” and “theirs” in this situation. Regardless of who technically owns the land, it belongs to both of you.

Buying Out Your Spouse

Often, the simplest course of action is to buy out your ex-partner and assume full ownership of your existing house. This option offers a few advantages. First and foremost, you can stay in the home! You can also provide more of a sense of security for any young ones involved.

Buying out your partner does have some complexities, and your options could involve a cash payout or restructuring your mortgage. If this is an avenue you want to explore, reach out to your financial advisor and mortgage broker to determine the best strategy for you. If you do not have access to either, we would be happy to provide you with some recommendations!

Take a Buyout From Your Spouse

If you want to leave and your partner wants to stay, you can take the buyout and move on to a new home. This option can be simple or complex, depending on your family situation.

If you have young children, your custody agreement may require you to stay within a certain proximity to the other parent. Before choosing your new neighbourhood, ensure the area is child-friendly, meets any restrictions, and aligns with your separation agreement.

Creative Ways to Secure Funds

If you are wondering how to raise funds to buy another home post-separation, there are a couple of strategies to keep in mind. Contact your financial advisor and real estate lawyer for more information. Again, this is a little beyond our scope as real estate agents, but that doesn’t mean we can’t start you off with some brainstorming ideas. For example:

You may qualify to access funds from your RRSP. While it is intended for your retirement, the federal government will allow you to borrow against your RRSP with the Home Buyer’s Plan. Though meant for first-time homebuyers, many people do not realize that you might be able to use it after your divorce.

You may also qualify for a land transfer tax rebate post-divorce.

Selling the Matrimonial Home?

One partner buying the other out can be ideal if finances allow it. Other times, selling the house is the best way to make a fresh start. If this is what you choose, the Chell Team can help to establish the market value of your home and what to do to ensure the highest possible return. We also provide professional guidance and support to assist you with a seamless transition.

Selling the home allows you to cash in on the equity you’ve built together and empower you to go your separate ways. That said, remember that there are also some costs associated with any transaction, which can include:

Real estate commissions
Legal fees
Land transfer taxes
Closing costs
Current mortgage penalties
Moving expenses
Renovation and cleaning costs

When Children Are Involved

If children are involved, extra care must be taken to ensure they feel safe and loved throughout the separation. You and your partner may no longer be together, but your bond with your child hopefully remains strong.

Their needs will also guide your next steps, whether you choose to stay in the home, buy a new one, or rent. You’ll want a child-friendly neighbourhood near high-quality schools in addition to being within a reasonable distance from the other parent.

Finalizing Your Separation Agreement

Coming to a separation agreement will simplify your divorce proceedings as well as the division of property and other assets. This will also help you determine what to do next.

Finalizing your separation agreement can be straightforward or complex depending on your assets, custody agreement, and how much you and your former partner agree on asset division.

Get Support

The support of your friends and extended family will also be imperative throughout your separation. They can be there when you need a sounding board or for a fun adventure to get away from it all. Movie nights, hiking trips, or even a day at the spa help you stay connected during what might otherwise be a lonely time.

At some point, you will likely need professional guidance to ensure your impending decisions are informed and financially sound, especially when emotions are running high. There are a number of experts who can assist you, including:

Mediators
Lawyers
Accountants
Family Therapists

Any investment toward your peace of mind and financial security is well worth it.

Are you planning to buy a new home once the dust settles? The resources below can help:

The Chell Team Is Here for You

At the Chell Team, we provide a collaborative, client-first approach and a high standard of service to help guide you through the buying or selling process. Our compassionate and caring experts are determined to make the most out of your sale while tactfully helping you move forward to your next chapter.

Do you have questions about your specific buying or selling situation? Our experienced Ottawa real estate agents are happy to guide you through it all. Reach out to mail@chellteam.com or call 613.829.7484 to begin a conversation.