Selling your family home during or after separation is an emotionally and financially significant decision. A key question that often comes up is whether you need a separation agreement before moving forward.
While it's not strictly mandatory in most Canadian provinces, having one strongly protects your rights, simplifies transactions, and offers clarity during a challenging transition.
We strongly recommended having a Separation Agreement in place BEFORE you sell your family home or buy a new home – post separation.
Why You Should Get a Separation Agreement
When emotions are running high, it can be difficult to make decisions about the family home. A separation agreement brings certainty to the process and prevents unnecessary disputes. By having everything in writing, you and your former spouse can move forward with a clear plan instead of facing avoidable roadblocks. Some reasons why you should get a separation agreement include:
Provides Necessary Clarity for Banks and Legal Professionals
In Canada, separation agreements are not legally required to sell a matrimonial home, but lenders and real estate lawyers often want to see one before finalizing transactions. Without it, the sale may face delays and added legal hurdles—something a DIY approach may not resolve.
Defines How Proceeds Are Divided
A separation agreement clearly outlines how sale proceeds are divided between spouses, reflecting your unique situation—not the default provincial regime.
Clarifies Who Can Stay, For How Long, and the Costs Involved
It addresses who may remain in the home while it's listed, timelines for sale, allocation of closing and selling costs, and other important logistics.
Shields You from Future Disputes
If one spouse refuses to cooperate—perhaps delaying move-out or refusing to sign—the separation agreement beforehand spells out the rules and mitigates conflict.
What the Agreement Can (and Should) Cover
A well-drafted separation agreement does more than divide assets—it also sets expectations so there are no unpleasant surprises during or after the home sale. Some of the most important issues it should address include:
- Occupancy Arrangements: Who stays in the home until it sells? Does one partner remain temporarily and who pays the mortgage or utilities?
- Selling Timeline & Selling Costs: How long will the sale process take? Who covers realtor fees, repairs, staging?
- Division of Proceeds: What share goes to whom? How are joint mortgages or debts addressed?
- Tax Implications: Though Canada doesn’t impose capital gains tax on the sale of a principal residence, the agreement clarifies any exceptions or investment-connected nuances (e.g. excluded property increases).
- Outstanding Registered Assets: For example, if your First Home Savings Account (FHSA) needs division, a separation agreement may allow a direct transfer without tax consequences—if properly stipulated.
By covering these details upfront, you reduce the likelihood of disputes and make the entire process—selling, dividing proceeds, and moving on—much smoother.
What Can Go Wrong Without One?
Skipping a separation agreement might feel like it will speed things up, but the opposite is usually true. Without a written plan, you open yourself up to delays, disputes, and potentially higher costs down the road. Here are a few common issues:
- Proceeds could be held in trust or jeopardized by title or property disputes.
- Spousal interference such as refusing to list the property could stall the sale.
- Legal and emotional costs may escalate, particularly in high-conflict separations.
In other words, while it may seem tempting to “just sell the house and split it later,” the lack of a clear agreement often creates more problems than it solves.
What If One Spouse Refuses to Sell or Sign the Agreement?
In that case, you have options:
- Mediation: Try resolving the impasse with the help of a neutral third party.
- Court Order: If necessary, apply to the provincial family court for an order permitting the sale—though this step is often costlier and slower.
Seeking legal advice before this escalation helps you choose the best path forward.
How a Family Lawyer Helps
Drafting Clarity & Enforceability
A lawyer ensures the separation agreement is legally binding, fairly negotiated, and enforceable—even years down the line.
Financial Disclosure & Protection
Your lawyer assists in exchanging accurate financial details—appraisals, debts, income—critical for a reliable agreement.
Customizing Provisions
From FHSA tax-neutral transfers to cost-sharing and occupancy rights, your lawyer will tailor terms that reflect your unique needs and jurisdiction.
Avoiding Future Litigation
By clearly documenting rights and obligations, a good separation agreement greatly reduces the risk of future disputes or court battles.
Moving Forward with Confidence
Selling the family home after separation is a major step—both financially and emotionally. Having a separation agreement in place ensures that your rights are protected, the rules are clear, and the process is as smooth as possible. If you’re unsure where to begin, our team at Richmond Tymchuk Family Law can guide you every step of the way.
From drafting enforceable agreements to resolving disputes with compassion and clarity, Richmond Tymchuk Family Law makes sure you’re protected and prepared.
If you have questions or need guidance, contact us today.
