Property Division, Sharing & The Matrimonial Home

Husband Plots to Quit Paying Property Taxes – Then Buy Matrimonial Home Out from Under Wife At Tax Sale

Husband Plots to Quit Paying Property Taxes – Then Buy Matrimonial Home Out from Under Wife At Tax Sale

This was a case in which the separated husband tried to use his own default in paying property taxes to force a tax sale of the matrimonial home … and then snap up the same home for himself.

When the spouses’ decided to separate, they agreed that the wife would continue to live in the $350,000, mortgage-free home with the four children, even though title to the home was in the husband’s name alone. (He had owned the home prior to marrying the wife). Furthermore, the wife had obtained a court order to have the husband pay the property taxes on the home.

However the husband – claiming that his business was failing and that he did not have the money – failed to pay the property taxes to the tune of about $8,500. Indeed, he indicated that he may have to let the house be sold by the municipality for unpaid taxes.

In response, the wife got another court order directing the husband to keeping paying the property taxes. The husband still did not do so.

(And it should be noted that the husband had a prior history of ignoring court orders: on a prior occasion he had unilaterally and secretly withdrawn about $145,000 from the parties’ joint account, which he used for his own purposes; the wife had to go to court to get an order forcing him to pay the money back into court directly. The husband ignored that order as well, and ended up facing a contempt motion which apparently persuaded him to make the payment).

The matter came back before the court yet again, this time with a request by the wife that in light of the husband’s continuing failure to obey the court order to pay taxes, his answer (meaning his defence to the wife’s various court claims) should be struck out entirely. While stopping short of granting that order, the court did allow the wife to bring a motion for another order transferring title to the matrimonial home into her name. The wife proceeded with such a motion, which eventually came before the court for its consideration.

In hearing the wife’s motion, the court looked at all the circumstances: First of all, the husband’s claims that he had no money were simply not supported by the evidence. To the contrary, various income documents that he had filed with the court showed that he earned more than $100,000 in income in 2009, and $22,000 in 2010, which took into account a $138,000 deduction from the business for “Professional Fees,” although there was no evidence as to who those fees were paid to.

Next, the court speculated that the husband was actually trying to deliberately reduce his income in order to avoid having to pay what he owed to the wife. More importantly, the court concluded that the husband’s failure to pay taxes was actually a scheme to have the home sold by the municipality for non-payment of taxes, so that he could swoop in and buy the house back at the resulting tax sale.

In these types of situations, the court has the discretion to make orders to protect the integrity of the administration of justice. The court wrote:

It is axiomatic that a party [such as the husband] ought not be allowed to create a payment liability to be dealt with in the final determination of the family law litigation, then refuse to pay the outstanding property taxes so that the house is sold, and thereby potentially avoid the obligation to pay the other party. The result would harm the integrity of the administration of justice.

Here, by allowing the wife to take over title to the matrimonial home was not only consistent with that objective, but was also well within the court’s discretion. It would allow the wife to preserve the matrimonial home pending the final determination of the other litigation issues.

Finally, although the court did not take the drastic step of striking the husband’s answer at this point in the proceedings, it cautioned that it would do so if there were any further violation of court orders on his part.

For the full text of the decision, see:

Verch v. Verch, 2012 ONSC 2621


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About the author

Russell Alexander

Russell Alexander is the Founder & Senior Partner of Russell Alexander Collaborative Family Lawyers.