Hello, my name is Shazia Hafiji and I am an Associate at the Feldstein Family Law Group.
In today’s video blog, I will be discussing how the value of the matrimonial home is determined in family law proceedings.
Before we begin, it is important to understand what a “matrimonial home” is. In Ontario, a “matrimonial home” is defined as the property or properties that are ordinarily occupied by the spouses as their family residence. It’s not uncommon for there to be more than one matrimonial home, for example, if parties own a home and a cottage.
When parties separate they must determine what they are going to do with the matrimonial home.
If the home is jointly owned by both parties, then it’s typical for one party to buy out the other party’s interest in the home or for the home to be listed for sale and net proceeds to be divided equally between the parties, subject to a potential equalization payment. The rules are slightly different where only one spouse is on title to the matrimonial home.
If the home is going to be listed for sale, it is not necessary to determine the value because its market value will be the amount for which the home sells.
Alternatively, if one party wishes to buy out the other party’s interest in the home, the value of the home will first need to be determined or agreed on. This can be done in a number of ways: the parties may get an informal letter of opinion of value or comparative market analysis from a real estate agent; or they opt for a more formal valuation in the form of a full appraisal. Formal appraisals can be pricier, but they do tend to be more comprehensive and accurate.
Difficulties may arise where each of the parties obtain competing appraisals or letters on opinion of value. In such a case, the parties may opt to take an average of the two values; or if they really cannot agree on a value, they may be forced to litigate the issue.
So, it’s preferable and generally better for parties to obtain a joint appraisal and agree to be bound by that value. In order for this to occur though, the parties need to agree on an appraiser and they each need to agree to contribute towards half of the costs of obtaining the appraisal.
These approaches to determining the value of a matrimonial home can also be applied to other real estate, such as cottages or rental properties.
For more information on matrimonial homes and property division, please visit our website at www.separation.ca or contact us at (905) 581-7222 to schedule a consultation.