Do not start quietly drawing from the HELOC.
There are four separate questions here:
- whether the bank’s account mandate allows one borrower to access the HELOC;
- who the lender can pursue for repayment;
- who should ultimately bear the expense between the spouses; and
- what gets paid from the proceeds when the home is sold.
Those are not the same question.
First, a HELOC is not a joint asset or a pool of your own money. It is
debt secured against the house. If both of you signed as borrowers, the lender can generally hold both of you responsible for the unpaid balance. The fact that the bank may technically permit one borrower to make an advance does not give that borrower the right to decide that the resulting debt is automatically a 50/50 family expense.
Second, this sentence should stop you:
“My spouse isn’t aware of this account.”
If she is actually a joint borrower, obtain the original HELOC agreement and determine exactly what she signed, what disclosure she received, and whether either borrower can transact independently. Do not borrow against jointly owned home equity through an account she supposedly does not know exists and then expect a court to characterize the borrowing as agreed joint debt.
That would be self-help. It would also create a completely avoidable disclosure and credibility problem.
Third, stop putting renovations, mortgage payments and utilities into one category. They are not interchangeable:
- mortgage principal, property tax and insurance are carrying costs connected with preserving the property;
- utilities generally relate to the parties’ current use and occupancy;
- genuinely necessary or emergency repairs are one thing;
- discretionary renovations or improvements are something else entirely.
Neither spouse gets to select expenses unilaterally and then declare every dollar to be a joint 50/50 obligation. Any later credit or post-separation adjustment will depend on the evidence, the purpose of the payment, who received the benefit, and the overall financial arrangement. It is not automatic.
The proper process is:
- give your lawyer the complete HELOC agreement and statements;
- formally disclose the HELOC;
- prepare a ledger identifying every mortgage, tax, insurance, utility and repair payment;
- provide the invoices and proof of payment;
- distinguish necessary repairs from elective renovations; and
- propose a written interim expense-sharing arrangement stating that neither party will make further HELOC advances without written consent or a court order.
If your spouse refuses to contribute, that is something your lawyer can address. Section 24(1)(e) of Ontario’s
Family Law Act allows a court to order a spouse to pay all or part of the repair and maintenance costs and other liabilities arising from the matrimonial home. If a property proceeding has been commenced and there is a genuine risk of depletion, section 12 also permits preservation orders restraining depletion of property.
As for the sale: if the HELOC is secured against the house, the outstanding balance will generally have to be paid and the facility closed before the lender’s charge can be discharged. That normally occurs before the remaining net sale proceeds are released.
But that only answers what must be paid to the
lender. It does not determine how the debt is allocated
between the spouses.
If you secretly draw $25,000 after separation, your spouse can argue that the $25,000, the interest and any related charges should be deducted entirely from your share of the sale proceeds. A holdback may then be required until the parties agree or a court decides the issue.
Also, stop saying she is “pretending” to have no money. Either her financial disclosure demonstrates an inability to contribute or it does not. Deal with documents and evidence rather than characterizations. Form 13.1 should be the first request from your lawyer and you should be preparing one as well.
You already have a lawyer. This is precisely the issue you should send to that lawyer before touching the HELOC.
Borrowing against the house to pay the house does not resolve the contribution dispute. It merely converts the dispute into additional secured debt and creates a second dispute over who must repay it.
Do not manufacture a bad fact while complaining about the other party’s conduct.
