Since its detection, the Covid-19 pandemic has inspired a global ripple effect both inside and outside the home. With the influx of restrictions and work-from-home orders, adjusting to this new normal can take a toll on relationships. When kept in close quarters, new or increased stressors can lead to arguments and bickering, taking small cracks in marriages and creating chasms.
With mounting pressure on couples, rates of divorce and separation are increasing with each passing day. While the decision to end a relationship or marriage is not an easy one, neither is the legal aftermath. It is no secret that family law courts have been stalled, pushing filings and court dates further and further away but during this time, the world has continued to change.
Navigating Family Court During the Pandemic
Since the beginning of the pandemic, property values throughout the lower mainland and Fraser Valley have increased, skyrocketing over the last 5-6 months. With this, property assets and equity have shifted in the upswing. Not only has Covid-19 impacted the court calendar, but it has also impacted valuations of shared marital property. In order to ensure that assets are divided fairly, more and more Canadians are seeking advice on what to do with their new circumstances.
Time Delays: A rise in Covid-19 cases last spring forced delays in family courts. Stay-at-home orders and the inability to gather has drastically impacted the court calendar. As the family law system reschedules and recovers, filings and proceedings that would normally take 6 months can take a year or more. In addition to prolonging what might be a contentious situation, as time passes, your circumstances may change, particularly in regard to equity and property valuations.
Property Values and the Real Estate Market: With more at stake than ever, it is important to properly understand your position before entering into an agreement. For example, if your initial divorce petition was filed before this latest real estate boom, the valuation of your home or marital property may have changed. Even if you began the divorce process before the pandemic, the events following will have changed the global and local markets.
For example, if Mr. and Mrs. X began their divorce in 2019, they will have had valuations performed of marital property, including a shared home. If during this initial valuation the home was valued at $1.7 million but is closer to $2.6 million in 2021, there is additional equity that needs to be addressed. This new pricing will render any previous financial or support assessments obsolete and will need to be recalculated for proceedings to go forward.
It is uncommon for a divorcing couple to retain the same living space or address. In this case, one spouse will retain residence in the home and will take over the financial maintenance and responsibilities necessary for retaining it.
Dividing New Equity: If the value of a home has increased during a period of separation and one party has been paying necessary costs like insurance and property maintenance, should this new equity be shared equally? The short answer to this question is “Yes”. Ownership does not change just because equity does. If one spouse is entitled to 50% of value on the first day of ownership, that division is retained throughout.
The sharing of post-separation assets extends to a wide range of fluctuating investments, such as RRSPs, precious items, jewelry, or artwork. When managing these assessments, it is always best to consult with a legal professional. An experienced family law firm can help to navigate the fluctuations in both the market and your portfolio.