Below is a summary of the joint assets:
If you do not work out a settlement to buy your spouse’s interest in the property, the Trustee can go to Court for an order forcing the sale of the home. You could argue that leaving the home would cause you and your family undue hardship based on the following factors:
This is a challenging argument on which to succeed, however it is available in certain circumstances, such as a child who has special needs that cannot easily be accommodated in a different school or you will have to move a great distance away from family and friends to find a new living situation. If you are confronted with a motion for sale, you should consult a lawyer to see if this defence is available. However, it is important to note that this is a temporary solution. Once your children have finished school, the Trustee will likely be free to move forward with the sale.
The negotiation starts with the following mathematical exercise:
The presumption with respect to joint ownership is that you and your spouse are each entitled to 50 per cent of the remaining equity. This presumption, however, can be adjusted if you have contributed unequally to the property or there are encumbrances attributable to you or your spouse only.
Therefore, your husband’s equity will be reduced by $50,000 for the CRA lien because it is supported by a debt owing solely by your spouse. You can also claim compensation for the principal amount of the mortgage you paid over the 12 months. The Trustee would owe you one half of the principal pay down because you and the Trustee benefited equally from your payments towards the mortgage principal. If you have made improvements to the property that increased the value of the property, such as replacing the roof, major renovations such as a kitchen or bathroom renovation or finishing a previously unfinished basement, you will likely be entitled to a credit for this work as well.
You have a few options to fund this purchase:
There are some options that may assist you:
The Trustee will review the transfer and the separation agreement to ensure that the transfer was not improper and unfair to your husband’s creditors.
If the separation agreement was incorporated into a court order, the transfer will likely remain unchallenged.
If there is no court order, the Trustee will consider the following factors in order to decide whether to challenge the separation agreement:
If the Trustee suspects the agreement and the resulting transfer of property was made to defeat your spouse’s creditors, the Trustee has a duty to the creditors to challenge the transfers. If this happens, you and/or your spouse will have to defend the separation agreement. If you cannot successfully defend the transfer, you will have to pay for your husband’s contributions, if you want to maintain the RESPs. If you cannot, the RESPs will be collapsed and you will have a property claim for the value of your contributions to them.
It is recommended for you to have the assistance of a lawyer, familiar with these issues, to assist you in your negotiations with the Trustee.
This article has been prepared for the general information of our clients. Specific professional advice should be obtained prior to the implementation of any suggestion contained in this publication.
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