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!