Couple in Separation Stalemate: Court’s Crafts a Solution
What should a court do when a divorcing couple is at a roadblock with selling their matrimonial home? What if there is more still owing on the home than it is actually worth? These were the key question in a recent decision called Sartain v. Mccabe.
The couple first lived together in a home owned by the wife in the Niagara region. Then in 2008, they bought a home in the village of Paisley, and married a year later. When in 2011 they separated after less three years of marriage, the husband moved back to the Niagara region, while the wife stayed in the Paisley home. They listed the property for sale in 2012, with the intention of selling it as soon as possible.
However, the process of unravelling their financial and marital relationship was hampered by several things. First, each of them alleged that the other’s actions interfered with the sale of that Paisley-area matrimonial home. On the husband’s part, for example, he had continued to make the mortgage payments, but refused to pay any of the other expenses, including property insurance premiums, with the result that insurance was eventually cancelled for non-payment.
But the more significant hurdle was that the outstanding mortgage – about $215,000 – was more than the house was worth. While this would certainly leave them in a financial bind for the future, there were immediate repercussions as well, because both of them had unrealistically dug in their heels on price. As the court explained:
II. Sale of the matrimonial home
The matrimonial home in Paisley continues to be listed for sale. Both parties want the property sold. The balance outstanding on the mortgage is approximately $215,000. According to the testimony of the listing realtor, the property is expected to sell for less than that amount. She also testified that the principal reason the property has not sold is that the price the parties are willing to accept for the property substantially exceeds its expecting selling price.
This, in turn, affected the wife’s entitlement to spousal support. The court described that interplay this way:
Dealing first with the entitlement issue … I agree with [the wife] that she has established entitlement to spousal support, applying the principles referred to previously. The basis for her entitlement is primarily non-compensatory, that is, on the basis of need. After the separation, [the wife] was left living alone in a location that she no longer wished to be, in a house she could no longer afford to run, and without the employment opportunities that would allow her to pay her expenses. To some extent, the continuation of this situation is of her own making, since she is unwilling to take the financial hit associated with selling the matrimonial home at its apparent market value and relocating to a location where she is confident of finding remunerative employment. However, [the husband] also bears responsibility for that situation, since he has shown no more willingness than [the wife] to sell the property for a price that would allow a sale to occur.
After concluding the wife was entitled to spousal support and making an appropriate monetary award, the court then turned its attention to solving the lingering problem of the matrimonial home’s sale. The court considered – but ultimately rejected – the wife’s request for an order that the husband buy out her interest; it pointed out in light of her established support entitlement, and given that the outstanding mortgage was greater than the home’s value, the net payment would actually flow from the wife to the husband, rather than the other way around.
The court ultimately crafted a solution to the impasse, taking into account the realities of the situation. It wrote:
[The wife] did not object to [the husband’s] request for an order that the Paisley property continue to be listed for sale. An order to that effect will issue. The order will also require the parties to co-operate with the listing and sale of the matrimonial home. The order will not direct how the proceeds of the sale will be applied. No useful purpose would be served by doing so, since it does not appear likely that the proceeds will be sufficient to satisfy the amount outstanding under the mortgage in full.
In other words, the court stepped in to direct the parties to co-operate in selling the home, but stopped short of making any order as to the proceeds, since they were likely to be non-existent in these circumstances. The juxtaposition of the still-outstanding mortgage against the home’s actual market value made such an order moot.
For the full text of the decision, see:
Sartain v. Mccabe, 2015 ONSC 2198 (CanLII)