Selling During a Split....

If you’re going through a breakup or a divorce- things are hard enough for you right now… but if you have property involved you may be wondering where to even start and what your options are.

I could(should?) keep this post short and sweet: call a lawyer. But hey, it’s the internet and giving some half-decent information or at least my opinion and then ENDING my post with: “call a lawyer” will likely increase your satisfaction with having read this. Plus I don’t charge by the hour like your lawyer will- so here we go.

It’s 2016 and less and less people are getting married before “shacking up” so you may be finding yourself in a position where your relationship has come to an end, but you have purchased property together. If you DID get married- cool, you have a unique set of protections. You can be reasonably confident that no matter how your paperwork was done when the house was bought, even if you didn’t contribute towards it or your spouse owned it before you got married you are protected and will be given an equal stake of the equity in the home and will be subject to certain Matrimonial Home guidelines for dealing with such things. (That is unless the property was excluded for a handful or reasons or you signed your rights away in some way- again, best to call a lawyer to check in your case.) These guidelines are pretty straightforward and well covered so I’m going to skip past them.

If you aren’t married- and you bought the house WITH your partner, you should be either Joint tenants or tenants in common. Regardless of which applies to your situation, the recourse when you want to “sell your share” is a bit less clear cut but similar.

In either case:

Option A) is that one party buys the other out and continues to live there. This is a good option if someone has the means and desire to continue living in the home, and both can agree on a fair price (or agree on an appraisal system to come to a fair price). The party who stays would either assume the entire existing mortgage or get a new mortgage for the new amount, and the funds owing to the party who intends to move out would be sent to their bank- presumably to buy another property but no judgement if you take the money and run to Vegas… you’re “home free” and single now.

Option B) is that both parties decide to sell and split the proceeds of the sale. This is sometimes the only option if either party can’t afford to live there on their own. The frustrating part of this is that either you live together during a break up (I’ve been there and it’s basically the worst experience ever) until it sells OR one of you doesn’t live there and you have to prepare and keep the home in sale-able condition. It can be really frustrating if you wanted to make improvements or clean up prior to the sale but you don’t have the access to do so.

You have to deal with the question of do you continue to contribute equally towards the mortgage (because you are still presumably earning the equity equally) if you have moved out and the expense of another home now? I can’t answer that question. Talk it out and to your lawyer if you need to BUT just make SURE things stay paid. You don’t want a *surprise* lien or back taxes dampening the mood when you finally do sell the house.

In either case, ideally you can still have mature conversations and deal with the decisions that need to be made together because getting the court/judge to do it takes time and money and generally no one is as happy with the outcome. Mediation may be an option if you are finding it hard to come to decisions but want to avoid the court costs/process.

Here is one more piece of disappointing news: If you AREN’T married AND you aren’t on title but have been paying the mortgage, contributed towards the downpayment or have a verbal agreement that it is joint asset… things are even less simple.

In Ontario we don’t have common law property rights. So no matter how long you have lived with somebody, even if you have to pay income taxes as common law partners… you don’t get the same benefits I mentioned married people get in regards to protection of property rights. You may have a leg to stand on in court, if you can prove that you contributed financially but it's an uphill and expensive battle.

It sucks, and it’s a mistake I made personally which resulted in my having to buy my house twice, including paying CMHC twice… because I didn’t go on title in the first place. As you can imagine this is why I’m pretty passionate about such things for my buyers and I remind all unmarried couples to really sit down with their real estate lawyer and see about maybe drafting some “what if” paperwork in advance. Even if you are on title, and joint or tenants in common… having a clear agreement on what happens to the house if the relationship ends is just good common sense.

That being said, very few of us use a whole lot of common sense in matters of love- so if you’re still reading here is some advice on what you should do if you are trying to sell a home while going through the gut-wrenching experience of ending a relationship (talk about adding insult to injury).

If you are planning on moving out, get an appraisal first. You can pay for an appraisal that will hold up in court, or you can have a Realtor give an opinion of market value, you may even want to do both. Most Realtors won’t charge to do a opinion of value (hint, hint, I don’t!) so you could even get a couple to compare. Tell your ex that they should likely do the same thing. Odds are your professionals and their professionals will arrive at a similar number. One less thing to fight about.

Ask any professional who walks through to give you a list of things they suggest fixing or improving before selling the house in writing. Now instead of going to your ex and saying “I think we should do XYZ with our rapidly evaporating money before we list our home” (sounds like a honey-do list!), it’s more like “hey, the real estate agent said if we don’t do XYZ we’ll lose money and have to keep the house on the market longer- so how should we budget for it”. Go ahead, make me the bad guy… I’m telling you this strategy works.

Take some pictures of the condition of the house before moving out. And just hope you won’t need them.

Be proactive. Do your homework, come to the table with solutions, and try not to let emotions make the process more painful or expensive than it has to be. Fall on your sword if you have to- getting this stuff dealt with gives you BOTH the freedom to move forward.

If communication is a challenge, think about hiring a full service Realtor who offers additional services like staging, and will help to coordinate all the tasks that need to be done (minor repairs, yard cleanup, decluttering) before the house goes on the market. A good full service Realtor should have all these contacts and be able to save you money by avoiding either doing a bad DIY job or hiring the wrong help. A neutral third party whose interest is getting you both the most equity possible out of your home, and will be able to communicate offers in a professional way with each of you will make the process a lot easier.

The good news is if you are in London, it’s officially a seller’s market right now. Only thing worse than a breakup and selling the family home is losing money in the process so let's hope it doesn't come to that.

Now, call a lawyer! And if you need a Realtor to help you through this process you can call me too.