With the recent slowdown in Vancouver’s real estate market, many separating spouses are considering whether to delay selling the family home. In a delayed sale, spouses agree (as part of their separation agreement) to retain ownership of the family home until a pre-determined time in the future, at which point either of them can trigger a sale. This does not mean that both spouses will continue to live in the family home, but rather that they will each maintain a one-half interest in the property and share the net sale proceeds when it is eventually sold.
Why might a separating couple decide to delay selling the family home? Here are some reasons:
1. They are hopeful that, if they wait long enough, the housing market will rebound so that they can sell at a higher price.
2. A sale now may mean that neither spouse is able to afford to live in the same neighborhood, which could affect both where their children attend school and the family’s overall connection to their community.
3. They want their children to be able to live in the family home until they graduate.
4. One spouse wishes to keep the family home but cannot afford to buy out the other spouse.
If a delayed sale seems to make sense for your family, there are a number of logistical things you will need to consider. Here are some of the key issues you will need to resolve in reaching an agreement with your ex:
1. When can the sale be triggered? Some examples include when your children reach a certain age, or on the day that is two years from the separation date.
2. How can the sale be triggered? For example, can one spouse decide or do both have to agree?
3. Can one spouse buy the other’s interest when the sale is triggered? If so, how will the purchase price be determined? By a property appraiser or…?
4. Who is responsible for which home-related expenses if only one spouse lives in the home between separation and the eventual sale? Examples of shared expenses might include mortgage payments, property taxes, house insurance, strata fees and major repairs, while the resident spouse might be solely responsible for costs like utilities, internet, minor repairs and maintenance.
5. Does the non-resident spouse receive any sort of compensation for his or her loss of use of the home?
Bottom Line
If you are considering a delayed sale, you need to think of your ex as a business partner, not a spouse. For that partnership to succeed, you both need to be on the same page. A detailed agreement can help ensure that your expectations are aligned and reduce the possibility of future misunderstandings between you.