Going through a separation or divorce in British Columbia and wondering what happens to the equity in your family home? Understanding your home equity is an important part of making informed decisions about your financial future.
Hello, I’m Judith Vandenberg, Real Estate Divorce Specialist with Royal LePage Wolstencroft in Maple Ridge, BC.
When couples separate, one of the biggest questions is often:
What happens to the equity in our home, and how is it divided?
Let’s take a closer look.
What Is Home Equity?
Home equity is the difference between what your home is worth and what you still owe on your mortgage and other registered debts secured against the property.
For example:
If your family home is worth $900,000 and your remaining mortgage is $400,000, you have approximately $500,000 in equity.
That equity represents the portion of your home’s value remaining after paying off the mortgage.
However, the amount of equity you have is not necessarily the amount you will receive when the home is sold.
There may also be selling expenses, mortgage discharge costs, and other financial obligations to consider.
How Is Home Equity Divided During Divorce in BC?
In British Columbia, family property is generally divided equally between spouses under the Family Law Act.
However, the division of property depends on your individual circumstances.
Factors such as when the property was acquired, whether there is excluded property, the value of the property at separation, and any applicable agreements can affect how the equity is divided.
For example, if you purchased your home together during your marriage, the equity accumulated in the home may generally be considered family property.
But what happens if one spouse owned the home before the relationship?
Or what if one spouse contributed money from an inheritance toward the purchase?
These situations may require a closer examination of the property’s history and financial contributions.
Every separation is different, and the division of home equity should be reviewed with a family lawyer.
What Happens If You Sell the Family Home?
Selling the family home is one option separating couples may consider.
When a jointly owned home is sold, the mortgage and other applicable registered debts are generally paid from the sale proceeds.
The remaining amount is then available for distribution according to the spouses’ legal rights and any applicable agreement or court order.
For example:
Your family home sells for $900,000.
Your remaining mortgage is $400,000.
Your estimated selling expenses are $35,000.
After paying these amounts, approximately $465,000 remains.
This is the estimated net equity available before considering any additional financial obligations or adjustments.
How that money is divided depends on your circumstances and the applicable property division arrangements.
Selling the home does not automatically mean each spouse receives exactly half of the remaining proceeds.
It is important to understand your legal rights before agreeing to how the money will be distributed.
Can One Spouse Keep the Family Home?
Yes, in some situations, one spouse may choose to keep the family home instead of selling it.
This is commonly referred to as a buyout.
For example, one spouse may want to remain in the home because the children are attending school nearby or because they would prefer to maintain stability during the separation.
The spouse keeping the home may agree to compensate the other spouse for their interest in the property.
However, there are several important considerations.
The spouse keeping the home may need to:
• Obtain financing to pay the other spouse’s share.
• Qualify for a mortgage independently.
• Arrange for the other spouse to be removed from the mortgage, if possible.
• Address the transfer of ownership.
• Obtain a proper valuation of the property.
• Have a lawyer review the proposed arrangement.
A buyout should not be based simply on the original purchase price or what one spouse believes the home is worth.
Understanding the current market value is an important part of determining the financial arrangements.
What If You Cannot Agree on the Value of Your Home?
This is a common concern during separation.
One spouse may believe the home is worth $950,000, while the other believes it is worth $850,000.
The difference can significantly affect the amount of equity each spouse believes they are entitled to receive.
Before making decisions about selling or buying out a spouse, it is important to understand the property’s current market value.
A real estate market evaluation can help provide information about:
• Recent comparable property sales.
• Current market conditions.
• The property’s condition.
• Features that may affect its value.
• A realistic selling price.
• Potential selling expenses.
A professional real estate evaluation can help separating couples make more informed decisions about their property.
It is important to understand that a real estate market evaluation is not the same as a formal appraisal or legal determination of each spouse’s entitlement.
What If Your Home Has Very Little Equity?
Not every separating couple has substantial equity in their family home.
Some couples may have purchased recently, refinanced, or experienced changes in property values.
Others may have significant mortgage debt or additional financial obligations.
If the home has little equity, selling may not provide the financial outcome either spouse expected.
For example, if your home is worth $750,000 and you owe $700,000 on your mortgage, your equity is approximately $50,000 before selling expenses.
After paying the costs associated with selling, the amount remaining may be considerably smaller.
This is why understanding your home’s current value, mortgage balance, and potential selling expenses is important before making decisions.
Should You Sell Your Home During Separation or Wait?
There is no single answer that works for every separating couple.
Some couples may decide to sell the home sooner to create financial separation and move forward.
Others may need time to understand their financial situation, obtain legal advice, or determine whether one spouse can afford to keep the property.
Before deciding whether to sell, consider:
• Your current mortgage balance.
• Your estimated home equity.
• Your monthly housing expenses.
• Your ability to maintain the property.
• Your current real estate market.
• Your future housing needs.
• Your separation agreement and legal circumstances.
It is also important to understand that waiting to sell does not guarantee the home will increase in value.
Property values can change, and both spouses may continue to have financial responsibilities associated with the home.
Having a clear understanding of your options can help you make a more informed decision.
How I Help Separating Couples Understand Their Real Estate Options
As a Real Estate Divorce Specialist serving Maple Ridge and the surrounding communities, I understand that selling a family home during separation can involve more than simply putting a property on the market.
There may be financial concerns, disagreements about the home’s value, uncertainty about timing, and questions about what happens next.
My role is to help separating couples understand the real estate side of their situation.
This may include discussing:
• The current market value of the family home.
• Estimated selling expenses.
• Potential net proceeds from a sale.
• Property market conditions.
• The financial considerations of keeping versus selling.
• Preparing the home for sale.
• Real estate options that can be discussed with your lawyer.
I can also help provide a Divorce Property Analysis Report to assist with understanding potential real estate scenarios.
This information is intended to support discussions and planning. It is not a legal opinion, formal appraisal, or determination of property division.
Your family lawyer can help you understand your legal rights and how your home equity may be divided under British Columbia law.
Understanding Your Home Equity Is an Important First Step
Going through separation can bring many financial questions.
Understanding your home equity can help you begin planning for your next chapter.
Whether you are considering selling the family home, buying out your spouse, or simply trying to understand your options, having accurate real estate information can make the process easier to navigate.
You do not have to make every decision immediately.
Sometimes the first step is simply understanding what your home is worth, how much equity you have, and what your options may be.
If you are separating and have questions about your family home in Maple Ridge, Pitt Meadows, or the surrounding communities, I am here to help you understand the real estate side of your situation.