Divorce & Real Estate

  Couples who go through a divorce usually have to decide and come up with a way in which their assets will be divided. Divorce itself brings a lot of stress and a lot of thought goes into deciding how divorcing spouses will share their property. The date in which the property was purchased is very important and is one of the biggest parts that is analyzed to determine what happens to real estate after a divorce. There are instances where a property was purchased by one spouse before the marriage, giving them exclusive ownership of the property. If the property however, was purchased as a home or as an investment for the couple after marriage, the property is considered a marital asset that would require equitable distribution between both parties.

Add Up Assets, Subtract Debts

Regardless of whose name is on the papers of a family property, both spouses share all family property equally in a divorce, unless stated otherwise by the court. Couples looking to divorce will have to add up all their assets and subtract their debts. Increased values of excluded properties are to be divided equally as well.

The general rule of division of property when getting a divorce is that the value of any property acquired within the marriage is divided equally between the spouses. In Ontario, any property acquired during the marriage will be divided equally among both spouses during separation. Property that increases in value is shared with both spouses even if it is an inheritance, a gift, or bought by one spouse before the marriage. This rule does not apply to common-law partners or live-in relationships.

Excluded Property

An excluded property is an exception wherein one spouse is allowed to keep the property as their own. Exclusive properties include property that is not the family home that was inherited or given as a gift by someone other than the opposite spouse during marriage and a property that both spouses have agreed to exclude in the agreement. Again, a family home that was gifted or inherited is not an excluded property.

Get In Touch with Professionals

Aside from lawyers, there are other professionals that you may need to get in touch with that will assist in the equalization of properties. These include real estate agents, real estate lawyers, appraisers, accountants, and family lawyers.

Documents

Contracts and Agreements

Before getting married, couples sign a legal document called a Marriage Contract to protect their rights if they are to separate in the future. Included in this document are rights to properties. Partners who are in a common-law relationship have something similar called a Cohabitation Agreement. These agreements can indicate various terms that will take place if a separation happens. These terms may include child support terms, division of property and which spouse will move out of the home. The responsibility of who gets to decide over the children, if any, is not included in these documents. Both parties should sign these documents in front of a witness, who also needs to sign the document, to make it legal. Negotiation of the terms written in the contract may still be done afterwards. In the case that one or both parties involved in the contract does not agree with the terms, they may approach the court and ask a judge to make the decision for them. Couples must consult with their own separate lawyers before signing such documents and exchange financial information. 

Timeline

The timeline to finalize in the court how the property will be divided is 6 years from the day of separation or 2 years from the day the divorce is finalized, whichever comes first. This is if an equalization amount has not yet been established. The division can be decided without the help of court if both spouses can come to an agreement although a separation agreement needs to be reviewed by each party’s own lawyer before you can sign it. Once signed, it will be difficult to change it again later on.

Confirm Jurisdiction

A spouse and their lawyer will have to confirm the jurisdiction with the power to analyze the application for divorce. This step is usually not that difficult to complete as for the most part, the jurisdiction is determined by which province the couple lived in up until the date of separation.

Assess Value of Property

Real estate appraisers are normally hired to assist in assessing the value of a property. They are in charge of investigating and assessing portfolios and other assets. Excluded properties will be assessed according to the date before the couple were officially married and the current market value of the property. Any debt that was brought into the marriage by one spouse will not be shared with the other, thus the need to subtract it from calculations. Debt acquired during the marriage however, will be split equally between both spouses.

Negotiation

After having gone through all that process, it is time to make a claim. Regardless of the presence or absence of a lawyer, both spouses will go through negotiating the terms of their agreement. Most divorces end up dividing assets equally among spouses however, there are some instances where the court decides to divide them unequally.