What happens to the house when you separate in BC, and what gets signed first

Who gets the house when a couple separates in BC?

Neither spouse has an automatic right to the house itself. Under Part 5 of the Family Law Act, each is generally entitled to half the family property, and the home is often the largest part. Title doesn't decide it. Value one spouse brought in, inherited or was given can be excluded, but growth during the relationship is shared.

Family property is, broadly, what either spouse owns on the date of separation, including a home registered in one name only. The Act then sets some property aside as excluded: what a spouse owned before the relationship began, an inheritance, and a gift from someone outside the relationship, among others. The exclusion covers the value brought in, not the increase. If one of you owned the condo before you moved in together and it rose in value during the relationship, that rise is generally divided.

The spouse who says something is excluded has to prove it, usually with records such as earlier purchase documents, estate papers or bank statements tracing the money into the house. Where excluded money went into a jointly owned home, that tracing is often disputed and settled by compromise.

Equal division is the starting point. A court can divide unequally where an equal split would be significantly unfair, for example where one spouse ran up debt or let the property lose value after separation. In an agreement you can choose your own split, though one that is significantly unfair can later be set aside or replaced.

Under section 198 of the Family Law Act, a court claim to divide property must be started within a limited time, which runs from the divorce order for married spouses and from separation for unmarried spouses. Check it early, even if you expect to agree.

How does one of us buy the other out?

The spouse keeping the home pays the other their share of the equity, usually from a refinance, or by giving up an equal value in other family property such as savings or a pension. The agreement fixes the value and the payment, the lender approves the new loan, and the transfer and refinance then register together.

Start with value. Family property is generally valued at the date of the agreement, or of the hearing if a court decides, not on the day you separated, so an appraisal from months ago can be well off. Most couples get a current one, either one each or from a single appraiser they instruct together.

Equity is the appraised value less the mortgage and anything else registered against the home. The buyout is generally half of that, adjusted for any excluded amount and for how the rest of your property and debts are being divided. Some couples also allow for the selling costs the person keeping the home will meet one day; whether to do that is a matter for negotiation, not a rule.

The money usually comes from refinancing: the spouse keeping the home borrows enough, in their name alone, to pay out the existing mortgage and fund the buyout. Where the equity is offset instead, the agreement lists which assets go the other way, and dividing a pension or RRSP has its own process with the plan administrator.

Each step leans on the one before. Test the buyout with a lender before you sign, so the agreement promises something that can close. The lender then sees the signed agreement before it advances funds. On completion, the transfer and the new mortgage register on the same day, and the buyout is paid from the mortgage money. If you can't agree on value or on who keeps the home, mediation or arbitration under the Family Law Act can settle it without a court hearing.

What if we sell instead?

Selling is often the clearest route when neither of you can carry the home alone. If both names are on title, both of you sign the listing agreement, the contract of purchase and sale, and the transfer. The net proceeds can stay in a lawyer's trust account until the division is settled in writing.

Before listing, agree in writing on the realtor, the asking price, the lowest offer you will accept, and who keeps the home ready for showings. A floor price, with any offer at or above it accepted, heads off most later arguments.

On completion, the seller's lawyer or notary pays out the mortgage, the commission and the closing costs from the purchase price. What remains doesn't have to be divided on the day. It can be held in trust until a separation agreement or court order says how it is shared, so the sale doesn't force a rushed settlement of everything else.

Until completion, both of you stay liable on the mortgage, and the insurance, property tax and any strata fees still have to be paid. An interim agreement should say who pays each, whether those payments are credited back when the proceeds are divided, and who lives in the home while it is listed.

Can we keep owning the house together for a while?

Yes. Some couples keep the home jointly for a set period, often until the youngest child finishes school or prices recover, and then sell or complete a buyout. It only works if the separation agreement spells out payments, repairs and who lives there, and exactly what ends the arrangement and how the price is set then.

A deferred sale keeps two separated people tied to one asset and usually one mortgage, so the agreement has to do the work the relationship used to do informally. It should say who lives in the home and whether anyone else may move in; who pays the mortgage, property tax, insurance and strata fees, and whether those payments change each share at the end; who decides on repairs and who pays for the large ones; and what happens if one of you stops paying.

It also needs a clear end. The trigger can be a date, a child's graduation, the occupying spouse remarrying or moving out, or either of you giving notice after an agreed minimum period. Say how the value will be fixed when that day comes, whether the occupying spouse has the first right to buy, and who picks the realtor if the home is sold.

Both of you stay on the loan, so a renewal needs both signatures. And under a joint tenancy, a death during the deferral passes the whole home to the survivor unless it has been severed, as the last question below explains.

Who lives in the house and pays the mortgage until it's sorted out?

Until an agreement or order says otherwise, neither spouse has an automatic right to change the locks and keep the other out. A court can give one spouse exclusive occupancy of the family residence under section 90 of the Family Law Act. Most couples instead sign a short interim agreement on who stays and who pays what.

An exclusive occupancy order gives one spouse the sole use of the family residence for a time, whether or not that spouse is an owner. It is about who lives there, not who owns the home, and it is made by a court on an application. That is contested court work, which sits with Ng Sidhu Law (ngsidhu.com) rather than with Sidhu Legal's agreement practice.

An interim agreement is narrower than the final separation agreement. It records who stays for now, who pays the mortgage and running costs, and whether those payments will be credited later. Without one, the spouse paying the mortgage tends to expect credit for the principal paid down, while the other expects something for the use of their half.

Keep the mortgage current whatever else is happening. Missed payments show on both borrowers' credit, and if arrears build, the lender's remedies run against the home itself, shrinking what there is to divide.

What paperwork changes the title, and is there tax on it?

A Form A freehold transfer, filed electronically with the Land Title Office through the LTSA, moves the home into one spouse's name, and a property transfer tax return is filed with it. A transfer between spouses or former spouses made under a written separation agreement or a court order is generally exempt from the tax, if its conditions are met.

The lawyer or notary acting on the transfer prepares it, the spouse giving up their interest signs it, and it is filed together with the new mortgage. The tax return goes in at the same moment and is where the exemption is claimed. Because the exemption is tied to the agreement or order, the signed agreement needs to exist before the transfer is registered.

If the home is a strata unit, the strata corporation has to be told who the owner now is, and its certificate that the fees are paid is usually needed to register the transfer. Questions about the principal residence exemption and the home owner grant are for an accountant.

The spouse giving up their interest generally gets advice from their own lawyer before signing. A lender refinancing the home may insist on it, and even where nothing requires it, separate advice on each side makes the agreement much harder to attack later.

Whom a lawyer can act for is a separate question on each document. On the separation agreement, one lawyer can act for only one spouse. On the transfer and the refinance, the answer turns on the professional conduct rules on conflicts and on the lender's instructions, so raise it at the start.

Should I change how the title is held, or my will, before the transfer is done?

Often, yes. If you own the home as joint tenants, the survivor takes all of it on a death, and separating doesn't change that by itself. Severing the joint tenancy turns each half into a share your will controls. Separation already cancels gifts to a spouse in your will, but a new will should follow quickly.

A joint tenancy carries a right of survivorship: when one owner dies, the other registers the death and becomes sole owner, and the deceased's will plays no part. Separation alone generally doesn't end a joint tenancy. If one of you dies after separating but before the transfer, the survivor may take the whole home, leaving the deceased's estate to pursue a family property claim afterwards.

Severing converts the joint tenancy into a tenancy in common in equal shares, so each half passes under its owner's will. In BC one joint tenant can generally sever without the other's signature by registering a transfer to themselves; whether the other owner must be told is less settled, so take advice on notice. Severing isn't always right. If the agreement is days from signing, or severing would inflame a negotiation that is going well, waiting may make more sense.

The will is the other half. Under section 56 of the Wills, Estates and Succession Act, once spouses separate, gifts to the former spouse and their appointment as executor are revoked unless the will says otherwise. The rest of the will stands, which can leave it lopsided. Our guide to your will after separation explains what is cancelled, what isn't, and what to sign now.