May 01, 1996

Family Relations Act and the Collapsed Sale #251

May 01, 1996

Family Relations Act and the Collapsed Sale #251

By Gerry Neely
B.A., LL.B.

The sale of a home registered in the name of one spouse only collapsed when a matrimonial dispute led the other spouse to take proceedings under the Family Relations Act to protect her interest in the family home. The licensee who experienced this unforeseen end to what appeared to be a "done deal", wanted to know the wider circumstances which might lead to the same result and how that result might be avoided or at least minimized.

The non-title spouse was able to bring these proceedings because the home was ordinarily used for a family purpose. As such, it was a family asset which the Supreme Court has the power to divide equally between the two spouses, or in different proportions if that would be unfair. The court has the power to make an order preventing the disposal of a home to protect the interest of the non-title spouse. The court also may make an order allowing one spouse to have the exclusive use of the matrimonial home and its contents.

The couples who may exercise these rights under the Family Relations Act must be lawfully married. Fewer rights are available for a common-law spouse, defined in the Family Relations Act as a man or woman not married to each other, who lived together as husband and wife for a period of not less than two years. Each has the right to apply for exclusive use of the matrimonial home and its contents, but not to obtain an order which would give the non-title spouse an interest in the home.

While evidence of these rights will not be found on the title of the home when searched, an eligible, concerned nontitle spouse may unilaterally make an application under the Land (Spouse Protection) Act which will have the effect of preventing the disposition of the home without the consent of the non-title spouse. The application is to file an entry in the Land Title Office against the title of the home. To be eligible to make this entry, there must be land registered in the name of either the husband or wife, upon which a dwelling is occupied by them as their residence. The benefits available under this Act apply only to lawfully married couples.

That is not to say that a common-law spouse does not have the right to claim and to protect an interest in land. Usually the claim of a common-law spouse is based upon the grounds that an interest has arisen because of a contract or a trust. A person claiming this interest can file a caveat before an action is commenced or a lis pendens after an action has been brought, to prevent a transfer of title of the home.

The reason there aren't more problems in this area is because usually when there is a matrimonial dispute, by the time the property is listed for sale, the parties have agreed upon the terms of sale and the division of the sale proceeds. For the other instances where the matrimonial dispute has been smoldering and bursts into flames after the house is listed for sale, there are precautions a licensee may take as a matter of routine when property is registered in the name of one spouse only.

The licensee should treat the title as if both spouses were registered as the owners of the home. The desired result is the consent to the listing from the non-title spouse, either given on the listing contract or by separate agreement. This consent doesn't prevent a non-title spouse from attempting to prevent the sale. However, it may make it easier to reach an agreement that the sale should proceed because no better price can be obtained, the proceeds of the sale can be paid so as to protect the parties, and their receipt of the proceeds will help them to resolve their other differences.

If the parties are candid about their deteriorating marital status and they decline to accept your advice that they eac be represented by lawyers who can provide the framework of an agreement through which the house can be sold and the proceeds paid over, the licensee should try and have a separate agreement signed by them.

The minimum requirements would be an irrevocable agreement binding- upon both of them to list the property.for sale; that the non-title spouse will not dispute the validity of any off er made and accepted by the registered owner on title, which is not less than the agreed upon price and payable strictly in accordance with the terms of the spousal agreement; and that if any dispute arises other than with respect to the agreed upon price and the terms of the sale, the sale proceeds shall be paid to third parties representing each of them.

This advice may seem somewhat Pollyanna, as we all know disputes where the parties are so dug in that not even tact, sensitivity or common sense will help. However, your discussions may reveal at the beginning a future problem you can resolve now, or One so intractable that you may save yourself time, trouble and money by declining a listing.

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