What House Price to Use When Dividing Real Estate at Separation?

Dividing Real Estate at Separation: Vancouver Family lawyers nowadays are often asked about what house price to use when dividing real estate or houses after a couple has separated and one has moved out of the house. If you separate, your spouse moves out and you are responsible for all the mortgage, taxes and other expenses on the house, can your spouse come back and ask for half of the house’s value as of today? Or should he/she get the value as of the time of separation of when he/she moved out and stopped contributing to the house’s maintenance and expenses? This is a very tough question that Vancouver family lawyers and judges are faced with nowadays, especially given the insanity that is known as the Vancouver real estate market and the steep rising prices of Vancouver real estate.

Let’s see how the courts have dealt with this issue in the past:

Dividing Real Estate At Separation: Value of Real Estate Under the BC Family Law Act – Vancouver Family Lawyer Explains

Let’s say :

1. you and your spouse owned a Vancouver house or real estate which was purchased together.
2. In 2010, you two separated and he moved out. At this point, the value of the house was $1,000,000.
3.  For the last 6 years, you have paid for all the mortgage on this home in addition to property taxes, insurance, maintenance, etc.
4. This year, the Vancouver house is worth about $2,000,000 because of the rising housing market in Vancouver.
5. Your spouse comes back and says he wants half of $2,000,000 because this Vancouver house is jointly owned.
6. You say, no way, it was $1,000,000 when you moved and stopped contributing to it! It is not fair to get $500,000 extra for something you did nothing for after separation.

Dividing Real Estate At Separation: BC Family Law Act says Value is as at the Time of Trial or Agreement

Unfortunately, we Vancouver family lawyers know that the BC Family Law Act states that the value of an asset, whether it is Vancouver real estate or a car, is the value as of the time of Trial or Agreement. The trial is usually when the fighting ends. Agreements are signed when two parties agree on all issues. Both trials and agreements may take a long time to reach after separation:

• Some couples separate for years before sorting out their property issues;
• Some couples have to wait for a trial date which may take 1 or 2 years after separation;

The BC Family Law Act is problematic because valuing assets at the time of trial or separation can be very unfair as explained in the above scenario. Naturally many people go to court and argue that the Vancouver asset or real estate needs to be valued as of the time of separation and not a trial because only one person contributed to that asset after separation. Of course, the courts often make exceptions and value the BC real estate at a different date than the date of trial or agreement, or use another mechanism to bring some fairness into the situation:

The BC Family Law Act Exceptions to Valuing Assets at a Different Date or Dividing them Unequally

There are a few things the courts or Vancouver family lawyers can do to address the unfairness that can arise out of valuing property long after separation:

1. The courts can look at the value of the real estate at the time of separation and trial, and look at the difference between then and now. If the post-separation rise in value would make it unfair to give the non-contributing spouse 50% of today’s value, the courts can value the asset as of the time of separation and divide it 50/50 as of that time. 
2. The courts can also reapportion assets unequally to bring upon a fair division of assets. So looking at the above scenario, the court might give 70% of the Vancouver house to the person who contributed to it post-separation, and 30% to the spouse that did not contribute.
3. in cases where one spouse renovated or increased the value of the real estate in ways that are not dependent on the market forces, a very strong argument can be made to either divide unequally or value the Vancouver real estate as of the time of separation.

This area of law and these problems are recent and new because previously the rise in the housing market was not as steep as it is today. That is why Vancouver family lawyers are scrambling to bring on new and progressive arguments to convince judges that valuing an asset as of today may not give way to a fair outcome.

This topic is a lot more complicated than what we can say in this blog, and you could gain or lose fortunes on real estate at the time of separation. Contact our award-winning family law firm for an initial consult at [email protected] or call 604-974-9529 to get a consultation on your rights and options.