Quite often when couples separate, the most significant asset owned by the parties is the matrimonial home. In most cases, title to the matrimonial home is held jointly between the parties. It is not uncommon for parties to disagree about which party should have the right to “buy-out” the other’s interest in the property. In other cases, one party does not want the house but also doesn’t want the other party to have the house.
Many people believe that if one spouse is unwilling to agree to transfer their interest in the home to the other spouse, the party who wants the home can ask the court for an Order requiring the transfer. However, in the vast majority of cases, a Family Court judge in Ontario does not have the power to compel one spouse to sell their interest in the matrimonial home (or “family residence” if spouses are unmarried) to the other spouse. One scenario in which the Court could compel a transfer of one parties’ interest to the other is when they are doing so under section 9 of Ontario’s Family Law Act to satisfy an equalization payment; however, this remedy is only available for married spouses.
It is also unknown to most people that each joint owner in a property generally has the right to have the property listed for sale and sold, so that they may realize their equity in the property. This right is found at section 2 of Ontario’s Partition Act.
This issue has come up in many cases over the years, and continues to be a litigated issue notwithstanding the fact that the courts have been clear that such an Order is outside their jurisdiction. This issue was addressed by the Ontario Court of Appeal in 2013 in the case of Buttar v. Buttar wherein the trial judge made Orders distributing several joint properties between the parties. Justice Rosenberg, writing on behalf of the appeal court made the following statements:
- The judge’s order was problematic because it took away the Appellant’s “right to the highest price for the interest in the properties”
- The court has jealously guarded the rights of joint owners to the best price for jointly owned property, and the judge’s Order forced the sale between the parties, without the benefit of fair market value. Accordingly, even if the division of the properties was permissible under the Partition Act, it was not appropriate in this case.
- At paragraph 72 Justice Rosenberg states: “The application judge should have ordered the sale of the properties. Obviously, it would be open to the parties to bid on any of the properties.”
This Court of Appeal decision remains good law in Ontario, and clearly establishes that the court did not have the jurisdiction to force a sale of a jointly owned property between parties. This means that if one party would like to retain a home, their best and only option in most cases is to negotiate. The value of a residence for settlement purposes is usually based on the value of the equity at the time of settlement. Therefore, if a party wants to negotiate the purchase of the other party’s interest in the residence and property values are rising, the purchasing spouse should move quickly to finalize a buyout.
It is often in a party’s interests to have the assistance of a skilled and experienced Family Lawyer in the negotiating process, whether it’s with respect to a “buy-out” of the matrimonial home or any other complex legal issue in a Family Court proceeding. Our Family Lawyers, Greg Kay and Kady McCourt have a wealth of experience in the area of Family Law and may be able to help you resolve your Family Law case.