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Can Husband Be Forced to Guarantee Soon-to-Be-Ex-Wife’s Mortgage?

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Can Husband Be Forced to Guarantee Soon-to-Be-Ex-Wife’s Mortgage?

When the husband and wife separated after almost 20 years, the wife continued to live in the matrimonial home while the husband voluntarily paid some spousal support. As part of a post-separation settlement of their affairs, the wife took title to the home which had been encumbered by a $100,000 mortgage with the bank, guaranteed by the husband.

The mortgage came up for renewal shortly after, and the bank offered a rate of 4 percent if the husband was willing to act as guarantor again. If he was not, then the interest rate would be 6.3 percent.

The husband refused to guarantee the mortgage, and the wife took him to court for an order compelling him to do so, and to do everything else necessary to cooperate in the mortgage renewal.

The court refused to make such an order.

First of all, there was some question whether the Ontario Family Law Act even authorized a court to make such an order against a non-titled spouse: Previous court cases relied on by the wife had involved situations where the spouse who was still living in the home would not have qualified for a mortgage without the other spouse’s guarantee.

This was not the case here. The wife remained eligible to renew the mortgage even without the husband’s participation, and even though her finances were admittedly strained because the husband had not paid support for almost six months.

In fact – and aside from the lower interest rate – there was no up-side at all to having the husband involved at this stage. This was not a situation where (in the court’s words) the home would be “wasted” if the husband did not step up as guarantor; in fact, the home would likely have to be listed for sale in the near future, given the wife’s equalization payment obligations to the husband.

With that said, the court did acknowledge the reality that the husband’s non-involvement in the renewal would mean the wife would be burdened by a higher monthly mortgage payment. By way of a court-ordered increase to the spousal support he was to pay to the wife, the husband was ordered to pay half the difference between the monthly mortgage payment with and without his involvement as guarantor. Given that the home was to be listed for sale soon, this adjusted support order would be subject to review by the court after 90 days.

For the full text of the decision, see:

Soulliere v. Soulliere (2014), 2014 ONSC 3768, 2014 CarswellOnt 9405, Gregory J. Verbeem J. (Ont. S.C.J.)

 

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