Selling a home during a divorce is one of the most challenging transactions a homeowner may face. Between legal complexities, emotional stress, and financial considerations, it’s crucial to understand your rights and obligations as a seller. The process varies across Canada, with each province having distinct laws governing property division and sale.
This guide outlines the key factors that sellers should consider before, during, and after selling a property during a divorce, including legal requirements and provincial differences.
Understanding Matrimonial Property in Canada
In Canada, matrimonial property refers to assets acquired during the marriage, including the family home, vehicles, investments, and pensions. The division of these assets upon divorce is primarily governed by provincial and territorial laws, leading to variations across the country.
Generally, the net value of matrimonial property is divided equally between spouses, but specific rules and exceptions apply depending on the jurisdiction. Some provinces extend similar rights to common-law partners, while others distinguish between legally married and common-law couples.
Provincial Variations in Property Division
While the principle of equal division is common, each province and territory has specific legislation governing how property is divided in a divorce:
Western Canada
Alberta: The Family Property Act mandates an equal division of matrimonial property but allows courts to deviate based on factors like contributions and economic hardship. The Dower Act also requires spousal consent for selling the matrimonial home.
British Columbia: The Family Law Act applies to both married and common-law couples (cohabiting for at least two years). Property and debts acquired during the relationship are divided equally.
Saskatchewan: The Family Property Act presumes equal division, including for common-law couples who have lived together for two years.
Manitoba: The Family Property Act applies to married and common-law partners (cohabiting for three years or registered as common-law partners).
Central & Eastern Canada
Ontario: Under the Family Law Act, married couples share the net family property equally. The matrimonial home is fully subject to division, even if one spouse owned it before marriage.
Quebec: Governed by the Civil Code, property division depends on the matrimonial regime (e.g., Partnership of Acquests vs. Separation as to Property). Unlike common-law partners in other provinces, common-law couples in Quebec do not automatically have rights to property division.
New Brunswick, Nova Scotia, Prince Edward Island, and Newfoundland & Labrador: The Marital Property Acts in these provinces ensure an equal split, but courts can order an unequal division if necessary.
Territories
Northwest Territories, Yukon, and Nunavut: These regions follow similar principles of equal division under respective Family Law Acts, with courts having discretion to consider financial hardship or contribution differences.
Legal Requirements Before Selling a Home During a Divorce
1. Spousal Consent
Even if only one spouse is listed on the title, both spouses typically have rights to the matrimonial home.
In Alberta, the Dower Act mandates that a spouse must consent in writing before the home is sold.
In Ontario, both spouses must agree to the sale, regardless of ownership.
2. Separation Agreements & Court Orders
A separation agreement should outline:
Who will handle the sale process
How proceeds will be divided
Who will cover expenses until the home is sold
If spouses cannot agree on selling the home, one spouse can request a court order to force a sale.
3. Financial Considerations
Check for outstanding mortgages, home equity loans, or liens before selling.
Determine if the home sale qualifies for the principal residence tax exemption (to avoid capital gains tax).
Steps to Selling a Home During Divorce
Step 1: Property Valuation
Hire an appraiser to determine fair market value.
This helps prevent disputes over or under pricing.
Step 2: Choosing a Real Estate Agent
Select an agent experienced in divorce home sales.
Consider neutral representation (one agent for both spouses) or separate agents if communication is difficult.
If communication is open and positive selling for sale by owner is an option.
Step 3: Preparing the Home for Sale
Declutter, clean, stage, and make necessary repairs to maximize value.
Agree on a budget for home improvements to maximize sale price.
Step 4: Managing Offers
Both spouses must review all offers jointly and agree on terms.
Key factors:
Should you accept the first reasonable offer or hold out for more?
Will a lower offer with quicker closing be more beneficial?
If multiple offers arise, how will you negotiate terms?
Step 5: Negotiating the Sale Price & Conditions
Both spouses should discuss:
Consider quick closing vs. higher offers.
Minimum acceptable price
Move-out dates
Responsibility for closing costs
Step 6: Resolving Disputes
If disputes arise, mediation or legal intervention may be needed.
If mediation fails, the matter may go to court, delaying the sale.
After the Sale: What Happens Next?
1. Divide the Sale Proceeds
Proceeds are divided according to the separation agreement or court ruling.
Deductions include:
Mortgage payout
Real estate commission
Legal fees
Property taxes or outstanding debts
2. Updating Legal Documents
Change ownership documents, insurance policies, and estate plans post-sale.
3. Tax Considerations
If the home was your primary residence, you may be exempt from capital gains tax.
If it was a secondary property (e.g., rental home, vacation home), capital gains tax may apply.
4. Planning for the Future
Consider financial planning for purchasing a new home or securing rental housing.
If co-parenting, discuss how home relocation affects child custody arrangements.
Key Takeaways: Selling a Home During Divorce in Canada
✔️ Understand provincial property division laws—they differ across Canada.✔️ Obtain spousal consent before selling.✔️ Create a separation agreement to outline financial and legal responsibilities.✔️ Work with an experienced real estate lawyer to streamline the sale.✔️ Be prepared for negotiations, disputes, and financial considerations.
Selling a home during a divorce requires careful legal, financial, and emotional considerations. The laws governing property division vary by province, making it essential to understand your rights before proceeding with a sale. Consulting a real estate agent, lawyer, appraiser, and financial planner can help navigate the process smoothly.
If you're ready to list your home, work with an experienced real estate agent and real estate lawyer who understands the intricacies of divorce sales. For expert guidance and to find real estate professionals for homes for sale in Alberta, visit Pro Search today.
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