Some of the biggest questions that arise during a separation or divorce have to do with the matrimonial home: What’s my home worth? Will I need to sell? What if I want to buy my spouse out? What if they want to buy me out and I refuse? If you’re grappling with similar questions, read on…we’ll answer them. Of course, this post is not to be construed as independent legal advice, as every situation is different, but we hope that this post will help improve your familiarity with some of the important concepts below.
What is a matrimonial home?
In layperson’s terms, a “matrimonial home” is defined by the Ontario Family Law Act as a home that was lived in by the spouses at the time of separation. A matrimonial home can be rented or owned, and there can be more than one matrimonial home – for example, chalets or cottages can often (but may not always) fall into the category of matrimonial homes. Sometimes it is clear that a property is a matrimonial home, and sometimes it isn’t…this can be an issue to be worked through as part of the legal process.
Why is it important to know the value of a matrimonial home?
It can be extremely important to determine the value of a matrimonial home in the context of a marriage breakdown. Clearly, the home is often one of the most valuable assets, if not the most valuable asset, that people own, and both spouses deserve to be compensated fairly for the value of this asset in the context of the overall settlement.
If the home is jointly owned and will be sold as part of the separation process, the value will be pretty straightforward – it’s simply going to be the price the buyer pays, and often, the parties will simply agree to divide the sale proceeds equally after adjusting for the remainder of the property settlement they agree on.
Buyouts and creative matrimonial home settlements
As mentioned, many people sell their homes when they get divorced. But in other circumstances, they don’t, and in these situations, it will be crucial to take all possible steps to “get the value right.” We deal with situations like this all the time. These situations include:
As you can imagine from the examples above, there is no limit to the creative solutions we can arrive at in a well-structured mediation process, where we do our due diligence in order to properly value the matrimonial home, as well as all of the other “net family property,” and the parties’ incomes for support purposes.
Market value of the matrimonial home: Why it’s so important to “get it right”
In all of these “non-sale” cases and more, it is crucial to value the home as fairly and accurately as possible so that both spouses feel that they have been adequately compensated and not taken advantage of by the other. Otherwise, the person doing the buying out will balk out of fear of paying too much, or the person being bought out will hesitate out of fear of receiving a settlement that’s too low. If either of these fears persist, the buyout will not happen and the house will have to be sold – which may be a result neither party truly wants.
But how do you go about “getting it right?”
Having an appraisal done by a qualified third party is a must. Knowing the real and current value of the home is vital for prudent decision-making and conducting fair negotiations. It will also help you to feel empowered to some degree - which is just as important in these situations where many things feel like they are out of your control. Knowledge is power.
What Is an appraisal?
An appraisal is an assessment of what is considered to be the value of the home– also known as the “market value”. Market value, in short, is the highest estimated monetary value a property will bring in if listed for sale on the open market. In other words, it is how much money someone would be willing to pay for your property. The value can be expressed as one number, or as a range.
Sometimes appraisal values are required for both the date of separation as well as “today’s date.” This will depend on many issues in the context of your specific situation.
Who can do an appraisal for you?
In the past, only a certified appraiser’s report was acceptable to lawyers, mediators and judges. Nowadays, qualified real estate agents can also provide appraisals. Particularly in the case of mediation, where it’s essential to the parties that the correct value be arrived at, many separating spouses are choosing to retain a real estate agent, or agents, jointly, to provide the appraisal, since real estate agents are the ones on the ground and are the professionals who are intimately familiar with area properties and current market forces.
The bottom line is that there is no way to know the “correct” value without selling the property – but in the context of a well-run mediation process, clients can take comfort in feeling that the process was a fair and collaborative one, and they can sleep at night believing that the price was reasonable.
What should I ask my appraiser?
Before hiring just any real estate agent to do your appraisal, be sure to verify that they really are qualified to do the job.
Here are a few questions you should ask any potential appraisers:
In challenging circumstances such as separation and divorce, having an experienced, neutral professional on your side can make the appraisal process run smoothly. Making sure the person you hire is truly looking out for your best interests, understands your situation and can be supportive will make this process much easier on you.
Our mediation and real estate services
RDK’s real estate partner, Daniella Gold, is pleased to offer no-obligation, complimentary appraisals to RDK’s mediation clients. Having been through a divorce herself, and by virtue of her extensive work with separating and divorcing clients at Harvey Kalles Real Estate, she understands how emotionally challenging it can be to negotiate over a much-loved home, and she will work tirelessly to educate and support our clients with the utmost of professionalism, compassion, and discretion while they are working through their divorce mediations with us. RDK clients who do ultimately decide to sell their homes receive our exclusive preferred client commission rates when they use Daniella as their listing agent.
Thanks for reading and we hope you’ve gained a clearer understanding of matrimonial homes, as well as the role we can play in ensuring that you are compensated fairly in your divorce settlement. Please contact us any time for more information on how we can help!
Welcome back to the RDK Divorce Group blog! In our last post, we busted several myths about mediation. Today, we’ll conclude by debunking a few more mediation myths.
Myth: If mediation fails and we wind up in Court, my ex will be able to use the things I’ve said in mediation against me.
Reality: In an “open” mediation, this is a legitimate concern, but in a “closed” mediation process, nothing that is said in mediation may be used by either party in subsequent Court proceedings. We have all of our clients sign a contract at the beginning of the mediation process, committing to a closed process and agreeing that nothing said in mediation can be used against them. This contract is binding and the Judge has to respect it.
Myth: Mediation replaces the need for lawyers.
Reality: Most ethical mediators, ourselves included, will encourage (but obviously can’t compel) clients to obtain independent legal advice at the end of the process, prior to signing a final separation agreement incorporating the terms agreed to in the mediation. Some clients also find it helpful to consult a lawyer before beginning the mediation process, in order to get a sense of their legal rights, and/or to have a lawyer in the background to consult with along the way. The level of lawyer involvement depends on a number of factors, including budget, complexity of issues, and degree of client sophistication.
Unfortunately, divorce lawyers have a bad rap for fanning the flames of conflict in order to steal people’s hard-earned money, and people try to avoid them like the plague; in reality, it is the system, and not most lawyers, which creates unnecessary drama. There are many ethical lawyers (especially collaborative family lawyers) who will respect your goals of efficient closure and who will be happy to spend 2-3 hours with you reviewing the draft mediation agreement at the end of the process, discussing it with you, and helping you finalize it in a manner which is respectful of the mediation process. Again, we can’t force people to have lawyers review their mediated agreements, but we do recommend it.
Myth: Mediators are too expensive. My ex and I are on amicable terms. We can negotiate our own separation agreement.
Reality: In rare cases where the issues are very simple, this may be true. But when you introduce the slightest complexity (children, finances), a DIY separation agreement can be extremely dangerous. There is a reason why mediators are paid for their skill and expertise; we at RDK have the necessary multiple professional designations and decades of experience to guide you expertly through this process and avoid all of the potential landmines along the way. We care deeply about our clients, but we are not personally involved in the emotional issues, as our clients are, and we can be objective. It can be extremely dangerous, in complex, emotional circumstances, to go it alone.
Unfortunately, we have had far too many clients come to us to clean up the messes they’ve created with DIY separation agreements. In these situations, we generally have to start all over, on the basis that someone felt taken advantage of, did not understand the agreement, and/or did not have legal advice at the time the agreement was signed. People are shocked when we share with them the basic tenet of contract law that agreements can be set aside or modified in any number of circumstances, including the ones we’ve just mentioned. Being forced to start all over again can have significant financial consequences and can lead to a lot of anger and resentment.
Mediation, done right, is a solid investment in a peaceful future. Our clients’ cases are completed efficiently, and they split our hourly rate in half. Compared to each person paying a lawyer for years on end, this represents a huge cost savings; unfortunately, this is one of the best-kept secrets out there.
We hope that we’ve helped dispel some of the common myths about mediation. If you feel that mediation could be right for you, contact us today and we’ll be happy to discuss your case further.
We’ll be back in a few days with a new post on how our unique interdisciplinary mediation system stands out from other mediation processes, and why we’re confident that RDK Divorce Group is uniquely positioned to give our clients the best possible guidance through one of the most challenging transitions of their lives. We’re excited to share more with you soon!