Selling a House After a Split – a case law review

Breakdowns in marital relationships are hard and complicated. One of the biggest challenges for soon to be former spouses is how to deal with the family home.

Sometimes both want to stay; sometimes neither do. Sometimes one wants to stay, but they cannot refinance it in the way that they would like to in order to keep the property and pay out some equity. Even when both parties do agree to sell, the process can be filled with conflict.  Mixed understanding about how money is going to be split, which Realtor to use, and the types of offers that you are going to accept.

A recent family law decision out of Saskatoon is an example of that conflict. In B v. S, 2016 SKQB 117, a romantic relationship that started in 1998, and ended cohabitation in 2010.  There was some dispute about the length and nature of the relationship in the decision. Regardless, a Petition was issued and answer and counter-petition filed to resolve family property, support and custody issues. The home at issue was registered exclusively in the name of Petitioner, but the Respondent claimed it to be family property. As part of those steps, the Respondent registered a certificate of pending litigation (CPL) against the title of the home.  Essentially, it is a notification on title to all future transferees of the claimant’s interest in the home.

In 2015, Ms. B, registered owner, decided to sell the home.  She received an offer for $145,000 from her neighbor.  This was based on an appraisal of the home of $170,000 as a bare lot, less the estimated costs of $25,000 to remove the property.  Mr. S was advised on her intention to sell the property, but never heard anything about the offer to purchase or the valuation.  A contract was signed in early 2016.

Shortly after, Mr. S was asked to signed transfer documentation. He refused as he wanted to know the amount owing on the mortgage, and a copy of the offer.  When he found out how much it was being sold for, he offered $150,000 to purchase the property.  The parties were at a standstill, and the vendor asked the court to push the sale along and remove the CPL.

Mr. S objected. He argued that the family property should be sold for its highest value, and that that would be as a dwelling, not a tear down.

The court considered three prongs of section 47(1) of the Queen’s Bench Act to determine if the CPL should be removed. The court considered the following:

1. Did Mr. S not proceed with his family property claim in good faith? The court indicated that while no formal steps have been taken since November 2010, it was not all his fault. In fact, Ms. B failed to file some necessary documentation in order for the action to proceed.
2. Was the claim for an interest in property? The court confirmed that a claim for a division of family property is properly considered an interest in land, unless absolutely clear than the claim can, in no circumstances succeed. While there were some questions about the spousal relationship, the court was not going to determine that issue with this application.
3. Were there other appropriate grounds that the order could be made? The court indicated that in some circumstances, it would make sense to allow the sale and protect the proceeds for future division of the proceeds. In this case, given the dispute about the true value of the land and the evidence filed, the court did not feel that it represented market value of the property. The court also determined that it required information regarding the secured debt against the property and the equity remaining.

The Court determined that it was not going to order the relief sought at that time. However, the Petitioner-Vendor Ms. B could bring the application back if she provided further better information about the value of the property.  She was also responsible for the costs of the application, which the court valued at $400.

So if you are going through a similar conflict, what are some practical steps to avoid this issue? Well….Check in next week on Part 2 of this article.