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