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Financial Issues This forum is for discussing any of the financial issues involved in your divorce.

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Old 09-15-2016, 05:56 PM
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Default Matrimonial Home Buy out option??

Just want to thank all who contribute here; it is an amazing resource. While unfortunate, it will really provides insight and direction. Thanks in advance for any help

Background: Common law 5 years, married 8. Separated since Apr 01/15.

House purchased Jun 2010 365K
Estimated Value on Separation 370K (270k mortgage)
Estimated Value Current 400k
Payments made to her (Approx 45k)

My ex and I split on pretty good amicable terms. It was hard, like all these matters but we endured. It was actually more initiated by her, but believe it became quite apparent I was more stable and rationale one at the time. I suggested we move back to Vancouver, as I was much more employable there, and we had a small business there. Our son hadn't started school, we owned a condo, etc. She was steadfast against this, and while I think her reaction was more to maintain control, I felt we could make a go where we were. I wanted to keep the house for us and stability for our son who was starting k5 at a school 3 blocks away 5 months later. He was okay, but I think the hidden tension prior to our break affected him (we took him and still do to counselling for anxiety, and being a little down/morose). I offered to vacate the house for her to reside in: at that time, and several other occasions over past 18 months but it never materialized. A couple of times she said she would but never really went far with the notion.

So now when I reminded her I am near what was discussed in terms of buying her out (40K (50 k less her share of mortgage penalty, realtor)(through text, verbal, emails) she has basically acted like I haven't paid her a dime and is now insisting we sell for 400k/260k mortgage and split even.

She moved out and rented a 1bdrm for 850 while I paid all expenses and mortgage related to house house (approx 1650 a month (mortgage, insurance, property tax, sewer). I didn't include expenses like heat, gas etc.

there is a small suite that rents for 600 in the house. I netted 238(based on tax filing) a month from it in 2015. It would probably be 400$ but we had major plumbing issue in suite which lowered net income.

I am not sure if she is or was eligible for any of that?

in terms of income, I made very little in 2015, about 15k. She made about 38k. I probably had my son 67-70% of the time. She did not pay me anything, nor did I want her too as she was struggling more to handle her finances. I asked her a few times to delay payment, or to borrow but she just obviously wasn't in a position. But now saying all that, based on the income disparity, would I be eligible for some support from her? (generic calculator says 6-8k) Could I apply towards buying her out? I believe I have read that could affect a claim she could make for occupational rent??

It was hard to hear this. I worked hard to better myself, live frugally over past 18 months to move on and buy her out. When she informed me of this it was hard, but I battle on and am trying to work with her. I have pleaded with her over this whole period to see a counsellor together, and also a mediator. She just steadfasts maintains she wants to sell right away and does not want to negotiate. Sorry if long winded. here are my questions:

She is indicating she has retained a lawyer and is going to apply to have me vacate the house and request it be put up for sale? How long would it take to serve me with this and what is process like/about. I want to ideally keep house, so what will I need to do/prepare for this? I don't think I can really afford lawyer.

How long does this process take? How much? Will I have to pay for any? I only ask these questions to maybe direct her to point of cost a lawyer will be/negate out of process?

Is there any way to veer/force her to mediation

am I out to lunch? (a little levity never hurts!)

Is she eligible for the bump in possible value of the house? (370 to now 400k)

Another variable her lawyer mentioned now is that she owned a condo before we got together. She paid 125k and we sold for 183K I lived in for 11 months before sale and it appreciated 25% during my tenure. Which would suggest it was worth 147K when I moved in. Does my time there account for anything? The closing costs were about 7k, she repaid her dad 7k for the down payment he provided on her condo, and paid her own debt of 5k. So at end of day proceeds were about 40k which we used to buy a house together. Ideas on how much of this is hers?

, my parents provided me 10k to buy our house together (after we sold condo for 183K) would she be eligible for that?

Thanks

Last edited by barlow; 09-15-2016 at 06:05 PM. Reason: hasty
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Old 09-15-2016, 07:04 PM
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Were you married at any point in time that you lived in the condo? Did you marry before or after selling the condo and buying the house?
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Old 09-15-2016, 07:08 PM
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thank you for your reply. We did not marry until about 2 years after owning the house together

Thank you
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Old 09-16-2016, 01:11 AM
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Quote:
Originally Posted by barlow View Post
Background: Common law 5 years, married 8. Separated since Apr 01/15.

House purchased Jun 2010 365K
Estimated Value on Separation 370K (270k mortgage)
Estimated Value Current 400k
Payments made to her (Approx 45k)
Quote:
Originally Posted by barlow View Post
thank you for your reply. We did not marry until about 2 years after owning the house together
I want to try to tackle this, but I can't figure out your timeline.

You separated in April 2015 after being married 8 years. Therefore you were married in 2007.
You bought the house in 2010 therefore that was AFTER marriage.
Yet you say you married two years after buying the house?

For equalization, figure out your individual assets and debts as of the date of marriage.

Then figure out your individual assets and debts as of the date of separation.

You should each walk away with the same change in net worth.

It's just a giant list of amounts, and some math.
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Old 09-16-2016, 01:28 AM
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thank you. sorry if not clear. met in june 2004. moved in with her quite quickly july 2004. sold her condo in 2005 of may and bought house together june 2005. Sold that house in apr 2010. bought a condo as an investment and a house together. We separated in Apr 2015. Sold our condo two months later. I gave her most of my portion plus more to equate 45K.

I don't know if our timeline or orr status change your deliberation. thanks
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Old 09-16-2016, 11:39 AM
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Quote:
Originally Posted by barlow View Post
thank you. sorry if not clear. met in june 2004. moved in with her quite quickly july 2004. sold her condo in 2005 of may and bought house together june 2005. Sold that house in apr 2010. bought a condo as an investment and a house together. We separated in Apr 2015. Sold our condo two months later. I gave her most of my portion plus more to equate 45K.

I don't know if our timeline or orr status change your deliberation. thanks
What is the date of marriage, and what did you each own on that date?

You said the date of separation was April 2015, and what did you each own on that date, and what did you own together?

Those are the only things that matter.
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Old 09-16-2016, 03:05 PM
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Thanks. married Sept 2006. Separated Apr 2015. So what of things like the proceeds of her condo? I moved in her condo in july 2004 and we sold june 2005? we used those proceeds plus some money from me to buy a house together?Is that moot or you are implying that just counts as each own's assets we brought into the marriage?

Thanks
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Old 09-16-2016, 03:37 PM
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So you bought a house, which became the marital residence, with a down payment consisting money from the sale of her condo plus money you put in? I believe that the money you each put in at that time is considered to have been mingled, so you don't each get to take out what you put in - you share the proceeds from the sale of the house.

How to share the proceeds:

Equity in marital home at date of acquisition (June 2010) = X
Equity in marital home at date of separation (April 2015) = Y
Increase in equity during course of marriage = (Y-X)
Amount of equity each spouse is entitled to = (Y-X)/2

During the time between separation and the present, if you were living in the home and paying all expenses associated with the home (mortgage, taxes, utilities, etc), most likely the amount in expenses that you paid is roughly equal to the amount your ex would have been justified in charging for occupational rent, so it's a wash.


If you keep the house, you owe her $(Y-X)/2. How you pay this is up to you and her to negotiate - you remortgage the house and get the money that way, give her some other marital assets that add up to $(Y-X)/2, transfer pension funds, whatever. It may or may not be possible for you to keep the home. If you can't afford a lawyer and your income is very low, selling the home may be the best thing you can do right now.

With respect to the basement suite, I think you would owe her half the amount that you made from renting the suite less half the amount that you spent fixing it and maintaining it.

With respect to child support, if you had your son more than 60% of the time over the last year, she should be paying you child support according to the Federal Child Support Guidelines for her income (which won't be a lot if she's making $38K). With respect to income support for you (spousal support), you can't base this on income discrepancy alone - you would have to have a good case that your low income came about in part because you supported your ex in acquiring her higher income - supported her through school or stayed home with the kid so she could work, etc.

Of course I am not a lawyer and could be completely wrong about some of this.
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Old 09-16-2016, 08:56 PM
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Quote:
Originally Posted by barlow View Post
Thanks. married Sept 2006. Separated Apr 2015. So what of things like the proceeds of her condo? I moved in her condo in july 2004 and we sold june 2005? we used those proceeds plus some money from me to buy a house together?Is that moot or you are implying that just counts as each own's assets we brought into the marriage?

Thanks
The condo is irrelevant because it was gone before you married.

What did YOU own in Sept 2006? What debts did you have?
What did SHE own in Sept 2006. What debts did she have?
Anything that had both your names on it, divide in half for each of you. If the house was only in her name, it's her asset. If both your names were on it, divide it 50-50 even if the downpayments were uneven.

Then...

What did YOU own in April 2015? What debts did you have?
What did SHE own in April 2015? What debts did she have?
Anything that had both your names on it, divide in half for each of you. At date of separation, this includes the marital home and mortgage, even if it only has one name. It is always divided in two.

Now you know how each of you was financially affected by the marriage. An amount of money then flows from one person to the other to make each of you affected the same by the marriage.

It sounds like your confusion stems from the fact that she put more money into the home you owned at marriage date than she did? Then you might find it fairer to divide that up in a different ratio for date of marriage that favours her instead of 50-50 like I wrote above. Is that what she's pushing for?

When two people buy something jointly, even if they made uneven contributions, they own it 50-50 unless there is some kind of contract signed that specifies that one party owns a greater share than the other. I'm assuming you didn't do something like that because you were never imagining you'd break up. Talk to a lawyer (or accountant?) to make sure.

You sort of have to decide if the hassle and expense of arguing over it and possibly going to court is worth more than the amount you'd be fighting over.

If you want to keep the house, you need two things. You need the bank to be willing to let you take over the mortgage based on your income alone. And you need enough cash or other assets to be able to cover her share of the house in equalization. Maybe you keep the house instead of dividing her pension. Maybe you increase the mortgage to get the extra cash. It all depends on your situation. You don't have to sell the house and divide the proceeds evenly if you have other assets that can account for its value.
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Old 09-17-2016, 03:46 PM
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I think the value of the property date of separation is most commonly used (but correct me if I'm wrong). The OP's case may be fairly simple because he says that from the date of separation he paid all the bills, mortgage, etc, when the ex moved out. This means that her contributions to the house effectively stopped when she moved out, so her benefit from the house (her share of the equity) stops then too. The OP got to live for free in the house that the parties jointly owned while ex had to pay rent, but this is balanced by the bills the OP paid (which is what I mean when I say that this is probably a wash.

If a lot of time has gone by between separation and proceeding with divorce, it can be tricky determining what the property would have been worth when one party moved out and stopped making any payments. This might be something to be decided by negotiation rather than by trying to figure out exactly what this house was worth a year ago.
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