Selling a House After Divorce or Separation in Ontario

When a relationship ends, the family home is often the biggest asset and the hardest decision. Even if only your name is on title, Ontario law may stop you from selling it on your own.

This article explains what a matrimonial home is, when your spouse's consent is needed, what happens if a sale goes ahead without it, and how a court can step in. It is general information, and your situation may differ.

What counts as a matrimonial home

A property is a matrimonial home if a spouse has an interest in it and it is or was ordinarily occupied by the spouses as their family residence. Both spouses have an equal right to possession of it, and separation does not end spouse status for these rules.

So moving out does not automatically free you to sell. It also does not matter whose name is on title, as long as a spouse has an interest in the property and the family lived there.

When you can sell without a court

Under the Family Law Act, a spouse may not sell or mortgage an interest in a matrimonial home unless one of these applies:

• the other spouse joins in the transaction or consents
• the other spouse has released their rights in a separation agreement
• a court order authorizes it
• another property is registered as the matrimonial home by both spouses

The simplest route is usually a written separation agreement that deals with the home and releases the rights, or the other spouse signing the agreement of purchase and sale. A lawyer can confirm the right paperwork for your closing.

What if a sale happens without consent, or consent is refused

A sale made without the required consent can be set aside on an application under section 23 of the Act. That does not apply if the current holder bought for value, in good faith, and without notice that the property was a matrimonial home. Even so, a buyer's lawyer will usually ask about this, and a sale that can be challenged is a risk for everyone.

If your spouse will not agree, a court can authorize the sale or mortgage where the spouse whose consent is needed cannot be found, is not capable of consenting, or is unreasonably withholding consent. Whether refusal is unreasonable depends on the facts.

If you and your former partner own the property jointly, other rules can also apply. Joint tenants and tenants in common may be compelled to partition or sell the land, and any person interested in land may start an action or application for partition or sale. For inherited land, no partition proceeding may start until one year after the death.

Common-law partners and other money questions

The matrimonial home rules use the Family Law Act definition of spouse that covers married persons, including void or voidable marriages. The wider definition that includes unmarried cohabitants applies only to support, so the consent rule does not protect unmarried partners. If you are a common-law partner, other rights may still matter, so get advice on your own situation.

Selling also touches your mortgage and taxes:

• A closed-mortgage prepayment penalty is usually the higher of three months' interest or the interest rate differential.
• Ways to lower a penalty include using yearly prepayment privileges, porting the mortgage, or waiting until the end of the term.
• An open mortgage can be broken without a prepayment penalty, though administration, appraisal, reinvestment and discharge fees may apply, and cash back may have to be repaid.
• A seller of a principal residence must report the sale and designate the home on Schedule 3, and complete Form T2091(IND).

What to do next

• Confirm whether the home is a matrimonial home and who is on title.
• Ask your spouse in writing whether they will consent, or whether a separation agreement will deal with the sale.
• Request a written mortgage payout statement so you know the real cost of selling.
• Gather the mortgage terms to see whether it is open, closed or portable.
• Speak with a lawyer before listing, especially if consent is uncertain or refused.
• Ask an accountant how the principal residence designation applies to you.

Frequently asked questions