Buying Out Your Spouse's Share of the House in Ontario

If you want to stay in the family home after separation, the usual route is a buyout: you keep the house, and your spouse receives their share in money or in other assets. It sounds simple, but it connects three separate issues: what the house is worth, how the overall property division works out, and whether you can afford the financing.

This article explains how those pieces fit together in Ontario, using the basic rules for married spouses. Your numbers and your lender's requirements will be specific to you, so treat this as a map and not a plan.

How the house fits into property division

Net family property is the value of property at the separation date, minus debts and excluded property, less the same net value at the date of marriage. A negative result counts as zero, and the spouse with the larger share pays half the difference as an equalization payment.

The family home is treated generously towards sharing. Its full value is shared even if one spouse owned it before marriage or received it as a gift or inheritance, unless the spouses agree otherwise. Only the house and a small surrounding area count. The mortgage is deducted at separation, but not in the marriage-date calculation.

In practice, this means a buyout is rarely a standalone deal. It is one part of the whole property calculation, which also includes pensions, savings, vehicles and debts. An Ontario pension counts as property in the division, and the pension administrator can provide information about its value.

Valuing the home

The key date is separation, because that is the date used for valuing property and debts. If the home's value is disputed, spouses often obtain a professional appraisal, sometimes jointly, so that both accept the same number. Whether you need one, and what type, depends on your circumstances.

• Start with the separation date and ask what the home was worth on that date, not today.
• Find the mortgage balance at separation, because it is deducted.
• Subtract the mortgage from the value to get the equity in the home.
• Include other property and debts, so you see the whole equalization picture.

If you disagree about value, a lawyer can explain how to put the issue in front of a judge or settle it by agreement. Both spouses also provide financial information, using Form 13.1 where property or debt claims are made. These statements must be sworn or affirmed before a lawyer or commissioner of oaths, and a courthouse clerk can commission them for people without a lawyer.

Paying your spouse: equalization, cash or other assets

The buyout amount is usually worked out by combining the home equity with the rest of the property calculation. If you keep the house, its value is on your side of the ledger. If your net family property ends up larger, you owe an equalization payment of half the difference. If your spouse's is larger, they owe you, and that amount can reduce what you must pay to keep the home.

Refinancing and the lender

Most buyouts that use borrowed money depend on a lender who must decide whether to lend to you alone. Lenders generally look at your income, credit history, existing debts and the value of the home. Their criteria differ, and the information in this article does not tell you what any particular lender will accept.

Because lender approval can take time and may fail, it is sensible to speak with a mortgage professional before you commit to a buyout number in a settlement. Ask whether you qualify on your own income, including any support you receive. In deciding spousal support, the court considers each spouse's condition, means, needs and other circumstances, and any order, agreement or arrangement relating to support. Whether support will be counted by your lender is something to ask the lender.

Build the timing into your agreement. Many people include a closing date and a plan for what happens if the financing is not approved.

What to do next

• Write down your date of separation and gather mortgage statements from that date.
• Collect bank, investment, pension and debt statements for both spouses.
• Arrange an appraisal of the home if the value is not agreed.
• Speak to a mortgage professional about qualifying alone, before you sign anything.
• Ask a family lawyer to review the buyout terms, including who pays costs and when the title changes.
• Keep the deadline in mind: an equalization application must be made within six years of separation or two years after the divorce is final, whichever comes first.

If you reach agreement, it should be in writing. When it is reached in court, agreements are written as Minutes of Settlement. If you need the court to decide property issues, a general Form 8 application is used where claims beyond divorce are made.

Frequently asked questions