What Happens to the Mortgage if My Spouse Keeps the Home in BC?

You are on the mortgage, and your spouse is staying in the home. It is natural to worry about being responsible for payments on a house you no longer live in, and about how to get your name off.

British Columbia law separates two relationships: the one between you and your spouse, and the one between each of you and the lender. This article explains how they interact and what steps people commonly take.

This article covers the law of British Columbia.

You and the lender are separate from you and your spouse

The Family Law Act says that dividing property and debt does not affect the rights of a spouse's creditors, guarantors or assignees regarding family debt. In plain terms, a deal or court order between you and your spouse does not bind the lender. A debt in your name remains owed to the lender by you.

So if your spouse agrees to take over the mortgage payments, you generally remain liable to the lender until the lender agrees otherwise. What the lender requires to release you varies, and it is worth asking the lender directly.

How the mortgage is shared between spouses

Unless an agreement or order says otherwise, spouses are equally entitled to family property and equally responsible for family debt. A debt in one name can still be family debt and shared. Family debt is generally what was incurred from the start of the relationship to separation, and after separation only if incurred to maintain family property.

The name on title does not decide who keeps the house. The family home is family property regardless of whose name is on title, shared equally unless an agreement or significant unfairness applies. If one spouse owned the home before the relationship, it remains excluded property, but its increase in value is shared.

Tools the court can use

To give effect to a division, the court can declare ownership, order a transfer, order compensation, order a sale, order security, or order debt indemnities. This is how a buyout or a sale of the family home is ordered. Where a debt is in one name but is family debt, the court can order indemnities, compensation or security to give effect to the division.

If the debt exceeds the property value, the court may weigh each spouse's ability to pay a share, and whether the debt was incurred in the normal course of the relationship. A court makes a division order only on a spouse's application.

Staying in the home for a time

A court can give one spouse exclusive occupation of a family residence for a specified period, even to the exclusion of the other spouse. This order is temporary, does not transfer ownership, and the court can postpone the other owner's sale or disposal rights and change the order.

If you worry that the home could be dealt with against you, the court must, on a spouse's application, make an order restraining the other spouse from disposing of the disputed property unless that spouse shows your claim will not be defeated or adversely affected; the order can be made before the other spouse receives notice and can be changed, suspended or terminated. A party to a property proceeding may also register a certificate of pending litigation against land whose title could change as an outcome, but only once a proceeding has started that claims an interest in the land; the claim must be about ownership or an interest in the land, and a claim for money alone is not enough. Alternatively, a spouse who is party to a property agreement may file a notice of agreement against the land, which means transfers or mortgages then require cancellation or postponement of the notice.

What to do next

Refinancing, lender consent and removing a name are decisions made by the lender on its own terms, and no rule in the Act forces a lender to release you. Contact your lender early to learn its requirements, and ask a mortgage professional or lawyer to explain your choices.

• Get your latest mortgage statement showing the balance, payment and term
• Find any separation agreement or draft terms about the home
• Ask the lender what it needs to release a name or approve a refinance
• Keep making payments while terms are settled, since the lender can still look to you
• Ask a lawyer about protecting your interest with an order or a filing on title
• Note the time limit: a property claim must be started no later than 2 years after the divorce judgment for married spouses, or after the separation date for spouses in a marriage-like relationship, and the limit is suspended during family dispute resolution

Frequently asked questions