How Mortgage Contributions Can Offset Spousal Support & Child Support
What happens when you move out of the matrimonial home, but your spouse continues to reside in the property? This often occurs when spouses are getting separated. Going through a separation or divorce can be extremely difficult mentally, physically and financially as well. One of the main questions that arises during this situation is who pays the utilities, bills and the mortgage, even when one party has moved out of the property?
Who pays the bills?
As stated in Colquhon-Kelly v Kelly the party that decides to remain in the property “…will be prima facie responsible for all of the expenses associated with the home” The general rule is that the party living in the property is responsible for all expenses for it, including taxes, insurance, the mortgage and utilities. It is important to note that post-separation adjustments can be applied as well. Post-separation adjustments are payments one person might owe after a couple has separated. They come into play when one person has paid for something that benefits both, like covering the other person’s share of a bill. If agreeable, spouses can agree on splitting the mortgage, utility, and bill payments.
Mortgage payments Can Offset Spousal Support Payments
In Colquhoun-Kelly v Kelly the Court stated that mortgage payments can be used to offset spousal support payments. In this particular case, the parties had separated and the husband moved out of the matrimonial home. The wife continued to live in the matrimonial home and the husband instead of directly paying spousal support to the wife, made weekly payments on the mortgage on the matrimonial home. At the end of each month, if the mortgage payments had been less than the spousal support amount owed, the husband would pay the difference.The court concluded that “even though the husband paid the mortgage directly to the mortgagee, I find that, in effect, the husband paid spousal support to the wife in the amount of $920 per month, and the wife used that amount to pay her living expenses”. As such, if mortgage payments are being made and one spouse is currently living in the matrimonial home, then mortgage payments can offset spousal support payments.
Can Mortgage payments offset child support
Mortgage payments can offset child support obligations of the payor parent depending upon the circumstances. Usually. Child support is owed to the child and not to the non-payor parent. However, in Osman v ElKadi the husband was paying the mortgage payments and property taxes towards the matrimonial home. The husband tried to advance the argument that the payment of the mortgage and the property taxes should lead to a deduction towards both spousal support and child support. The court stated that double dipping was not allowed. The court stated that the payments were not just providing a benefit to the husband and wife, but also the children. The payment allowed the children to have shelter. The court ruled that the husband’s payment of the mortgage and the property taxes should be credited with a deduction towards child support, and not spousal support as double dipping is prohibited. This means that mortgage payments can be used to offset child support. However, this is highly dependent on the circumstances of each case. If you are wondering how child support is calculated please click the link here.
Post-Separation Adjustments
Post-separation adjustments are monies that one party has incurred that the other needs to pay, after the parties have separated. For instance, if the husband is making all the contributions towards the mortgage payment, including the wife’s share of the payment. There will be a post-separation adjustment for half of the payments that he has made on behalf of his wife. if one spouse is paying certain expenses for the other spouse post-separation adjustments can include the following,
- Renovations to the matrimonial home which can increase the property value (if reasonable);
- Cell-phone bills;
- Mortgage payments;
- Utilities;
- Insurance payments of a vehicle;
- Interest on joint line of credits; and
- Rent received from the property
To name a few post-separation adjustments.
Mortgage Payments: Special Considerations
In the case of mortgage payments special considerations need to be taken. If you are married then each spouse has a right to half the value of the matrimonial home, after paying off all debts and encumbrances. Neither party can be forced out of the matrimonial home (unless the police are involved) and no one can make a decision regarding the property without the express permission of the other spouse. However, if the mortgage payments are late for 90 days or more the mortgage lender can begin foreclosure proceedings or a power of sale. A power of sale can start when you are just 15 days in arrears. The mortgage lender will issue a Notice of Sale, once you have received the Notice of Sale you will have 30-40 days to pay the arrears and bring the mortgage in good standing. If you do not pay the arrears the lender will then commence a Statement of Claim and the court can order that the lender seize the property and then sell the property.
Once the property is sold by the lender the proceeds from the sale are used to cover the remaining mortgage balance and any additional costs (including lawyers fees, court fees, realtor fees in order to enforce the Notice of Sale) If there are any excess funds from the sale of the property these will be returned to you. It is important that you stay current with your mortgage payments even in the midst of a separation. If the bank starts a notice of sale you potentially might be losing a lot of money from the sale of the property in order to cover the expenses of the lender.
Occupational Rent
Occupational rent is money paid by the spouse that is living in the property to the spouse who is not living in the property. Occupational rent is used to offset the costs of the spouse that is no longer residing in the property such as, moving expenses, finding suitable accommodation, paying rent etc. The purpose of occupational rent is to make sure that both spouses are treated fairly.
Financial difficulties can arise once you have separated from your spouse, especially if you have moved out of the matrimonial home. It is important to lay out a plan before you move out of the matrimonial home to ensure that the bank does not foreclose on the property that you saved up for or to ensure that your rights are protected throughout the course of the separation and divorce. Please schedule a consultation with Nazarian Law and our experienced family law lawyers in order to provide you with a roadmap and plan.
Key Takeaways:
- Mortgage Payments Can Offset Spousal Support: If you’re separated and one spouse continues living in the matrimonial home, mortgage payments can count toward spousal support, as seen in the case Colquhoun-Kelly v Kelly. This means a spouse paying the mortgage may offset their spousal support obligation.
- Post-Separation Adjustments: After separation, one spouse may be entitled to reimbursement for certain expenses they’ve paid on behalf of the other. These include mortgage payments, utilities, renovations, and other shared costs.
- Mortgage Arrears Can Lead to Foreclosure: If mortgage payments are overdue by 90 days or more, lenders can start foreclosure proceedings. It’s crucial to stay current on mortgage payments to avoid losing the property.
- Occupational Rent: When one spouse stays in the matrimonial home, they may need to pay occupational rent to the other spouse to help offset their living expenses.
Financial Planning During Separation: Separation can bring financial strain, so it’s important to understand your rights and create a strategy to protect your assets, especially when dealing with mortgage payments and spousal support.
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Disclaimer
The content provided in this article or blog is for informational purposes only. It is not intended to constitute legal advice or to replace the advice of a qualified legal professional. While we strive to provide accurate and current information, the law is complex and constantly changing, and each person’s circumstances are unique. Therefore, you should not rely on this information as a substitute for professional legal advice. This information does not create an attorney-client relationship between you and our law firm. We strongly recommend that you consult with a qualified attorney in your jurisdiction to understand your legal rights and obligations. Always seek legal advice before making any decisions that may impact your legal rights or obligations.
