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Should I Sell the House During or After Divorce?


A sign of house for sale sits on the lawn of a house.

 

Property division in divorce can be extremely challenging. The laws are complex and there are

many decisions to be made. One of the biggest decisions is what will happen to the family

residence during separation. Your home is likely your most valuable asset. It is likely the centre

of your life and your children’s lives, and it may be the source of many memories and deep

emotional ties.


In the past, it was common for one spouse to buy out the other spouse’s interest in the family

residence. This has become extremely difficult in the current housing market in British

Columbia. In many situations, it is just not economically feasible for one spouse to buy out the

other spouse and for the purchasing spouse to be responsible for a new and larger mortgage

on their own.

 

Sale of the family home will have to happen if neither of you can afford the home on your own or if neither of you wants to keep the home. If you are going through separation and need or want to sell the family home, you may be wondering about the timing of the sale. In today’s post, we will discuss whether it is best to sell the house during your separation or after your divorce.

 

Timing options for selling the house when separating from your spouse There are several options with respect to timing of the sale:

 

  1. The house can be listed and sold when you separate.

  • Note, however, that one spouse cannot sell the family residence without the consent of the other spouse. So if you are considering this option, you and your spouse must be in agreement even if only one of your names is on title to the property. If both spouses agree, the property can be listed and sold right away.

  • If the house sells before you and your spouse have been able to sort out other issues related to asset and debt division during your divorce, some or all of the proceeds of sale of the home can be held in your lawyer’s trust account until you reach an agreement or the court makes an order dividing your assets and debts.

  1. The house can be sold before trial.

  • If you cannot agree on what to do with the family home, you can file a Notice of Family Claim to start court proceedings and then bring an application within those proceedings for an order that the house be sold on an interim basis. Rule 15-8 of the B.C. Supreme Court Family Rules gives the court discretion to order the property to be sold on an interim basis where it is satisfied that the sale is “necessary or expedient.”

  • It is currently taking over a year in some Supreme Court registries to obtain a trial date. It is very common for spouses to reach an agreement with respect to sale of the family home at some point after the Notice of Family Claim has been filed but before the trial takes place. If you agree on a sale there is no need to make an interim application to force the sale.

  1. The house can be sold after trial.


Assuming you and your spouse are not able reach an agreement and neither of you

brings an interim application for an order forcing the sale of the home or one of you did

bring an interim application and it was successfully opposed, a trial will be necessary.

The judge can make orders respecting conduct of sale and how the proceeds of sale are

to be divided.

 

Should we sell our house during or after divorce?

 

Every situation is unique, and you should have customized legal advice before deciding

what is best for you. Depending on your circumstances, it may be better to wait to sell

the house. That being said, there are several advantages and practical reasons for sale

of the house before divorce, including:

  • Sale proceeds can be the cash infusion you need to move, start fresh, and navigate your new life circumstances.

  • If you want to buy a new home or condo of your own, it will be easier for you as you will have a down payment and be better able to secure financing.

  • It can promote settlement of other issues pertaining to parenting, support and property and debt division.

  • It may be easier to move on emotionally if the home is sold sooner rather than later.

  • There may be negative tax consequences with respect to capital gains if you and your spouse are not careful with respect to your post-separation living arrangements. A skilled divorce lawyer can offer legal guidance and document your agreement to preserve the principal residence exemption.

  • A court may refuse to issue a divorce order if you have unresolved issues arising from your marriage.

  • You may lose the right to make a claim for division of family property and family debt if you do not start a family court case for division of family property and debt within two years from the date a divorce order is granted by a judge.

 

Additional Considerations

 

If you agree to sell the house before you obtain a final order, do not assume you will receive

any share of the net sale proceeds if there is not a written agreement or court order in place

dealing with the division of all family property.

 

The net sale proceeds may be ordered by a Judge to be held in a lawyer’s trust account until all

the property and debt issues have been resolved. Other issues to consider if you have children are where each parent is going to live and what school(s) the children will be attending. There should be agreements in place regarding these issues before the home is listed for sale.

 

Trusted advice from an experienced family law attorney

 

There are highly important personal, legal and financial implications of the decision you make

with respect to selling the family residence. You need to know your legal rights and understand

the potential consequences of each option.

 

Valerie M. Little Law Corporation is a family law firm that is centrally located in New

Westminster and serves the surrounding areas of Burnaby, Maple Ridge, Coquitlam, Port

Coquitlam, Vancouver, North Vancouver, West Vancouver, Port Moody, Richmond, Surrey,

Cloverdale, Delta, and Langley. For guidance and legal advice customized to your situation, we welcome you to contact our family law firm today by email or telephone at 604-526-3333. Take action, let’s talk today.

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