Buying Out Your Partner’s Interest in the Family Home After Divorce

To obtain a divorce, the parties must decide how to divide their assets, including a family (or matrimonial) home. In some cases, one spouse may remain in the family home after separation, and they may want to buy out their ex-spouse’s interest in the house to keep it rather than sell it. There may be some requirements to obtain refinancing, but it is necessary to arrange for those promptly so the deal can close. 

In this article, we will discuss Kaur v. Bains, 2022 ABCA 404, in which the Alberta Court of Appeal upheld the parties’ agreement for the wife to purchase the family home even though she had missed the deadlines to obtain refinancing. We will also discuss important considerations if one spouse is purchasing the interest in the family home. 

Parties Agreed on Deadlines for Wife to Obtain Refinancing 

The parties jointly owned the family home, and the wife remained with their child after the parties separated. By the end of November 2021, the parties entered into a Consent Order that allowed the wife to purchase the husband’s interest in the home for $720,000 if she met the following deadlines:

1. December 21, 2021: The wife would provide the husband with proof of refinancing; 
2. January 31, 2022: The parties would close the transaction. 

The family home would be listed for sale if the wife could not provide proof of financing by December 21, 2021. 

Wife Unable to Obtain Refinancing Without Filed Court Orders

The wife could not obtain refinancing by the December deadline, as she required filed copies of the Consent Order and Child Support Order granted a day before the Consent Order. 

Wife’s Lawyer Informed Husband of Refinancing Steps Being Taken 

By December 3, 2021, the wife’s lawyer wrote to the husband’s lawyers, explaining that more time was needed to obtain refinancing, as she required the separation agreement, which was not yet drafted, the filed Consent Order and the filed Child Support Order. The wife’s lawyer enclosed an endorsed copy of the Consent Order to be sent for filing. The Consent Order was filed by the husband’s lawyers on December 21, 2021, and sent to the wife on the same day.

On January 6, 2022, the wife’s lawyer re-sent the December 3 letter, advising that the wife also required the filed Child Support Order to obtain financing. The lawyer enclosed the Order again so it could be endorsed and filed for the wife’s refinancing application. 

During January and February 2022, the wife’s lawyer also updated the husband’s lawyers regarding the refinancing application. In the Consent Order, the parties accidentally left out a term requiring the parties to sign any documents required to facilitate the transfer of the family home. On January 12, 2022, the wife’s lawyer sought the husband’s confirmation that he would do so. 

The husband informed his lawyers that he would sign the necessary documents after the wife’s mortgage was finalized. However, as the husband was not provided with any proof of financing as required by the Consent Order, he informed his lawyers that he would not sign an extension if the wife could not close the transaction by January 31, 2022. 

Despite the December 3 letter, in which the wife sought an extension, one of the husband’s lawyers advised on January 14, 2022, that his office had not received any proof of refinancing by December 21, 2021, as required by the Consent Order. Also, he asked if the wife was refinancing the existing mortgage or seeking a new mortgage. 

A week later, the wife’s lawyer said she had missed the January 14 email but repeated her request that the husband confirms if he would sign documents to transfer the land. The wife still needed a filed copy of the Child Support Order from the court for her refinancing application.  One of the husband’s lawyers responded that the husband would sign the necessary forms upon confirmation that the wife was obtaining a new mortgage but did not mention that the husband wanted to close the transaction by January 31, 2022. 

The Child Support Order was filed on January 27, 2022, which allowed little time for the transaction to close. 

Miscommunicated Instructions Between Husband and Lawyer

One of the husband’s lawyers wrote to the husband on February 2, 2022, confirming that the wife’s purchase of the family home did not close on January 31, 2022. Therefore, he was seeking instructions on listing the property for sale. The husband’s lawyer had only written to the husband, and the wife’s lawyer was not informed of the husband’s intention to close on January 31, 2022. 

One day later, the wife’s lawyer served the filed Child Support Order, advising that the wife was obtaining a new mortgage and they would provide the timeline to complete refinancing and the transfer of the home.  The wife’s lawyer then provided the transfer documents to the husband’s lawyers on February 15, 2022, with an approximate deadline of March 15, 2022. 

The husband’s lawyers then sent the documents to the husband and sought instructions on how the husband wanted to proceed: signing the transfer forms, despite the missed deadlines; listing the home for sale; or attending mediation to resolve the dispute. 

Afterward, the husband retained new counsel and refused to sign the transfer documents sent by the wife’s lawyer. 

Wife Files Urgent Application to Dispense Husband’s Signature to Transfer the Property 

The wife applied to dispense the husband’s signature for the property transfer due to the conversations between counsel and the delay in receiving the filed court orders. 

The husband argued that he never instructed his lawyers to extend the Consent Order deadlines. 

The chambers judge dismissed the wife’s application upon finding that there was no agreement to extend the deadline. The wife appealed. 

The Court of Appeal found that the chambers judge did not refer to the December 3 letter, in which the wife’s lawyer described that the husband’s lawyers agreed that the December 21, 2021, deadline was “flexible” as long as the wife was taking steps to finalize her refinancing application. The Court of Appeal also noted the following:

1. The husband’s lawyers at the time did not raise any objection to a flexible deadline due to the delays.
2. The wife was taking steps to promptly submit her application and provide the transfer documents, and was mainly delayed due to the court orders needing to be filed and returned from the court.
3. The husband’s lawyers never informed the wife or her lawyer that the husband intended to strictly maintain the closing date of January 31, 2022, in the Consent Order. 

Deadline to Transfer Property Extended by Court

The wife was given 90 days to purchase the family home. The husband had seven days to sign and return the closing documents once received. If the husband did not provide the signed closing documents, his signature would be dispensed. 

Key Takeaways 

1. Consider incorporating terms for extensions of deadlines, as there may be unanticipated delays; 
2. Set out agreements to extend deadlines in writing if possible, as this will be helpful evidence if there is a dispute; 
3. If you are the party seeking refinancing, it can be helpful for your efforts to be clearly communicated to the other side as ongoing updates.

Mincher Koeman Family Lawyers Can Assist with Dividing the Family Home 

The parties must consider how they will divide the family home upon a divorce. In some cases, one party may want to remain in the house and buy out the other party’s interest in the property. Even if the parties agree, consulting with our experienced family law lawyers at Mincher Koeman is essential to include agreement terms that cover unexpected scenarios and prevent disputes that may arise later on. We can help you develop a resolution best suited to your needs. 

To book a confidential consultation with Mincher Koeman, contact us online or by phone at 403-910-3000.