My Colleague Jonathan M. Lazar recently led a panel discussion on
the Family Home, at the Collaborative Divorce retreat on November 18th. It’s no wonder that the Family Home is one of
the most difficult issues to settle in a family law file, when there are so
many facets to consider. Here is some of
what Jon and the panel discussed.
SYMBOLISM: HOUSE AS A HOME
As most of us know, as house is not just a house, as lawyers
we need to consider what it means for our clients, for their children, for the family
as a whole. There is certainly a stigma
attached to ‘losing the house’, so there
needs to be great deal of thought given to how to deal with it in the context
of a separation and divorce.
OPTIONS – other than
selling
There are many options other than selling the Family Residence,
Jon and the panel listed a few including, sharing it (nesting) one spouse buying
the other spouse’s interest, creating an income stream by renting out part of
the house, one partner retaining an interest as an investment, asking a
relative to move in or co own the home.
The panel discussed creative ways to re-finance including a blend and
extend to lower payments and deferral of property taxes.
CONSIDERATIONS - legal and financial
In making a decision about the Family Residence, the panel
acknowledged it isn’t all about affordability, the parties need to consider the
welfare of the children, the ability of one party to physically maintain the property,
new partners, the proximity of parents and children to each other, transit, and
schools, as well as any special needs, the capacity to manage household debt
and the ability of the other party to find affordable housing. There are also the pets to consider, and
whether one party has an emotional or historic connection to the house. Are there mental health issues that need to
be taken into account and what will be the financial impact of the timing of
the sale?
Lawyers also need to advise their clients about excluded
property claims and claims for occupational rent should one party be living in
the house while the other party is living on their own and paying their own accommodation
expenses. Lawyers need to discuss timing
and listing of sale, as well as how to determine the value of the home if one
party is buying out the interest of the other. Parties need to know how and
when to change the locks, how to decide who gets what in terms of furniture,
right down to the towels and the cutlery. These are things that can cause a
heck of a lot of grief if not handled properly at the outset. Some good advice is to tell people that it is
not worth paying a lawyer to decide the value of your favorite couch which is
probably worth almost nothing to anyone else.
Lawyers also need to help parties come up with clear
agreements about listing and sale of property so that the process is clear, and
everyone knows what will happen if the house doesn’t sell within 90 days for
instance, and the price has to be lowered. Agreements should be in place setting
out the process for listing and selling, and what is happening with the sale
proceeds, as well as a dispute resolution mechanism to deal with conflict when it arises, which it will.
CONSIDERATIONS - personal and emotional
The Panel also discussed the potential or perceived bias and
loss that can be experienced by one party if they ‘lose’ the Family
Residence. How will it affect the
children to see a parent move out of the home?
What are the implications for the parent moving out and what are the
implications for the children?
CONSIDERATIONS - financial
In terms of financial considerations, the panel discussed
basic affordability and how to guide clients towards financial advisors who can
give advice and help make good decisions.
Considerations included what tradeoffs would have to be made in order to
be able to maintain the home as an investment.
How would each person’s budget be affected by the house purchase, and
were there other options like downsizing?
The financial concern of course being that a person is making an
emotional decision and committing themselves to an “all eggs in one basket”
financial position which may or may not be in their best interests.
As the list grows longer it’s easy to see why decisions
about the Family Home are so difficult to make.
Thanks to Jon Lazar and the panel for a fascinating discussion.
Karen F. Redmond, Family Law Lawyer
