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Legal Ease
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What if the other spouses NFP was about $200,000 (including

Customer Question

What if the other spouse's NFP was about $200,000 (including the house in his name only and the mortgage) more such that the other spouse would get $100,000 in an equal equalization If the spouse can't afford the $100,000 without selling the house and the other spouse wants to buy out the first spouse's interest, do you look at the equity in the house (about $266,000) plus the spouse's NFP without the house divided by 2 to get what she would have to pay him (at least as a starting point for negotiations) if he transferred the house into her name?

Also, if he can't come up with $100,000 in equalization payment but the other spouse can come up with the money to buy him out, would the court order that there be the buy out rather than the house sale even if he doesn't want her to have the house?
Submitted: 11 months ago.
Category: Canada Law
Expert:  Legal Ease replied 11 months ago.
The Court could make an order about the house.

Or the Court can just order the equalization payment and if it's not paid then the spouse who is owed the money can seek to enforce the Judgment against assets or wages.

So the spouse could register a lien on title and then seek to have the house seized and sold.
Customer: replied 11 months ago.

Could and how would the person be able to have a right of first refusal if they wanted to have the house seized and sold to obtain the equalization payment?


Wouldn't it be more likely the court would make an order regarding the buy out if the spouse could show she had the money to do so and it appeared that the other spouse wouldn't be able to pay the equalization amount.


 


The spouse wanting to buy out the other has two children from a previous marriage and 1 child from the present marriage.


 

Expert:  Legal Ease replied 11 months ago.
The Court could order that one spouse have a right of first refusal. That's not uncommon at all.
Legal Ease, Lawyer
Category: Canada Law
Satisfied Customers: 85516
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Legal Ease and 2 other Canada Law Specialists are ready to help you
Customer: replied 10 months ago.


Could you further clarify as I am not quite clear on what would be the range for her offer to him if she wanted the house (e.g. FMV of $400,000, mortgage $200,000)and if the equalization payment from him to her would appear to be about $100,000 if the house and mortgage were his asset and debt as they are in his name alone? If her NFP with the house would be $206,000 (equalization payment to him $103,000) and his NFP with the house is $200,000 (equalization payment to her $100,000), does this just mean that even though she doesn't in fact have the house as it is in his name, if he were to transfer it to her, then she should only have to pay him $103,000 for the transfer give or take an amount depending on other factors and how much either wants to keep or sell it?

Expert:  Legal Ease replied 10 months ago.
The NFP is what is needed to essentially equal.

Then if she wants to buy out any asset in his name she has to do so at fair market value.

And that is easy to work out as the value has already been established for equalization purposes.

But she can subtract deemed disposition costs.
Customer: replied 10 months ago.


So to equal if it would take $100,000 to her and if she wanted to buy the house asset (from him) it would cost her ($400,000 - $200,000 (mortgage and line of credit secured against the house) - $20,000 (disposition costs)) = $100,000 to her - ($180,000) = She should pay him $80,000 and she refinances/takes over the mortgage


 


Or $400,000 FMV - $20,000 (Disposition Costs) = $100,000 to her - $380,000 to him = $280,000 to him and he discharges the mortgage?


 


If either of the above could be done, then for someone with not much cash to spare, option one would appear to be better for her? What am I missing???

Expert:  Legal Ease replied 10 months ago.
You are right.

But either way the bank has to agree for her to take over the mortgage or give her a new one.

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