House Price Spiked? Can You Reduce Your Support Payments?

House prices have gone up a lot in Vancouver and other parts of British Columbia over the last few years, sometimes making “paper millionaires” out of the owners of an ordinary family home (a “detached house” in realtor lingo).

Suppose you and your ex split up some years ago. She got the house, you got the RRSPs, and (because of your higher income and earning power) you were ordered to make monthly spousal support payments.

Can you get off the hook on those payments now, given a substantial spike in the value of the house your ex-spouse got? Our BC Supreme Court recently faced such a request.

Frank, 55, and Ada, 52, were married for over 20 years. They separated in early 2007 and divorced in 2008. They had two children, 23 and 20 at the time of trial in early 2016.

In 2008, Frank and Ada agreed she would keep the matrimonial home (equity about $400,000), he would keep the RRSPs (worth about $130,000) and he would pay her some spousal support which was later set at $842 per month by the court. That figure took into account the fact that Frank’s annual income was about $114,000 while Ada’s was assumed to be about $44,000, and also that the house Ada got was more valuable than the RRSPs Frank got.

Ada remained single and kept living in her modest, older, 1800-plus square foot house with the children, renting out a suite to make ends meet. Frank remarried in 2010, and in 2011 moved to Sweden with his new Swedish spouse.

By September of 2015, Ada’s house (appraised at $700,000 in 2008) had gone up in value to almost $1.2 million. Frank argued in court that this substantial increase justified letting him off the hook on support payments to Ada going forward. But the court said no.

In order to vary (change) a spousal support order under the federal Divorce Act, there has to be a material change in circumstances, and it’s up to the applicant (here, Frank) to prove such a change happened. To qualify as a material change, the new circumstances must be of a kind that could not have been foreseen at the time of the original order. That wasn’t the case here – it’s a well-known, obvious fact that house prices change over time, noted the court.

The court also pointed out that Frank’s $842 monthly payment had been set at the low end of the guidelines when ordered in 2011. It was expected at the time to continue indefinitely, due to the difficulty a homemaker spouse in her 50’s (who’s been out of the job market many years) would likely face when seeking employment after a marriage break-up.

Here, it couldn’t be (and wasn’t) argued that Ada should sell her house. And increasing the roughly $300,000 mortgage on it wouldn’t make sense either – it would just mean higher mortgage payments for Ada to meet with her limited disposable income.

Frank had to continue paying Ada spousal support.

Written by Janice and George Mucalov, LL.B.s with contribution by COBBETT & COTTON. This column provides information only and must not be relied on for legal advice. Please contact COBBETT & COTTON for legal advice concerning your particular case. Names of the parties in reported cases have been changed or removed to protect their identity. Lawyer Janice Mucalov is an award-winning legal writer. “You and the Law” is a registered trade-mark. ©Janice and George Mucalov.

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