During your career as a real estate professional, you will likely act for sellers of a matrimonial home being sold as part of a separation or divorce. This column outlines the basics of selling a matrimonial home and offers guidance on how the process works from the perspective of the real estate lawyer acting for the sellers.
Having represented many clients who have sold their property pursuant to a separation or divorce, it is clear that these transactions are unique and can be challenging for all parties involved. One of the key concepts in such a transaction is the sale and division of the matrimonial home. The following concepts are essential to understand:
- The Matrimonial Home
The matrimonial home refers to the property where the married spouses were living on the date of separation. This property has special significance in family law because it is subject to equalization. Equalization is intended to ensure that the division of the matrimonial home and its proceeds of sale are fair to both parties. - Equalization
Equalization is the legal process through which the assets and liabilities of both spouses are calculated and compared to ensure a fair division of net worth. Family lawyers use the Family Law Act and a prescribed formula to determine each spouse’s net worth. Once those figures are established, the difference between them is divided by two. The spouse with the higher net worth pays the spouse with the lower net worth an equalization payment.
If the matrimonial home was purchased by one spouse prior to marriage and the other spouse subsequently moved in, the home becomes a matrimonial home upon marriage. Upon separation, the spouse who originally owned the property must share half of the equity in the home as of the date of separation. - Special Rights Regarding the Matrimonial Home
The law provides that, regardless of ownership, both spouses have the right to remain in the matrimonial home after separation. Likewise, neither party can sell or encumber the matrimonial home without the consent of the other spouse.
Now that you have a basic understanding of how the sale of the matrimonial home works, here are some practical guidelines and considerations when acting on such a sale during a separation or divorce:
Key Considerations for Real Estate Professionals
- Acknowledge the emotional impact.
Separation and divorce are inherently emotional, and selling the matrimonial home often adds another layer of difficulty. The home may hold significant sentimental value, and the process of selling it can be deeply emotional for both parties. - Confirm marital status early.
Both married spouses must consent to the sale of a matrimonial home. This rule does not apply to common-law partners. Therefore, it is essential to confirm the parties’ marital status before listing the property for sale. - Maintain professionalism and neutrality.
Emotions can run high during the sale of a matrimonial home. Be clear that your role as a real estate agent is to sell the property—not to provide legal advice. Encourage both parties to seek their own family lawyers for legal guidance. It’s also important to remain impartial and avoid being drawn into disputes between the parties. - Ensure agreement on key sale terms.
The separating parties must agree on several key matters, including the choice of real estate agent, listing price, showing schedules, and other sale-related logistics. In contentious situations, reaching these agreements may require negotiation through their lawyers. - Coordinate with legal counsel.
Once the property is sold, the parties will need a real estate lawyer to complete the transaction. Only one lawyer can handle the transfer of title, even if both parties have separate family lawyers involved in the overall matter. - Understand how sale proceeds are distributed.
One of the most common questions in these cases concerns how the sale proceeds will be divided. You should defer this question to the real estate lawyer. In general, after payment of the mortgage, commissions, and legal fees, the remaining funds are divided according to written directions provided by the parties or their lawyers—usually as set out in a signed separation agreement. In cases where the parties cannot agree before closing, the lawyer will hold the proceeds in trust until a resolution is reached. It is not uncommon for such funds to be held remain in trust for an extended period. Like you, the lawyer must remain impartial and act in the best interests of both clients.
Final Thoughts
The sale of a matrimonial home requires sensitivity, professionalism, and clear communication. By understanding the legal and emotional dynamics at play, and by maintaining neutrality throughout the process, you can help your clients navigate one of the most challenging transactions of their lives with integrity and care.