Dear David,

My partner and I are in the process of getting a divorce. We just firmed up the sale of our home. With real estate prices on the rise, my half of the sale gives me just enough to buy in the neighbourhood I want, if I act quickly. What do I need to move forward? – MOVING ON

DEAR MOVING: While it’s true that home values are on the rise, I urge you to pump the brakes on your next real estate purchase. You won’t be approved for a mortgage without a separation agreement.

It’s common for divorcing couples to assume the equity in their matrimonial home will be split 50/50, but the division of assets can be complicated. Should an unhappy spouse need a bargaining chip, they could ask their lawyer to hold proceeds from the home sale in trust until the details of your separation agreement have been worked out. If this happens, it could prevent you from closing on your next purchase and may leave you liable for any damages that result from failing to close.

In a hot market like ours, buyers need to have their financial ducks on a row so they can act quickly when the right opportunity arises. To ensure you don’t get caught short on financing, I strongly advise you to have a separation agreement in place and consult with your lawyer before you start shopping for your next home.

PRO TIP: One of the biggest challenges in many separation agreements can be pensions. Because pensions are considered property, they may need to be evaluated in a process that can take 60 days or more. A pension inadvertently forgotten until the last minute can also delay the finalization of a separation agreement.

Dear David,

We’re selling our Kitchener home and moving to Toronto. We are asking buyers for a $10,000 deposit, but the homes we’re looking at in the GTA require deposits of $100,000 or more! Why is there such a drastic difference? – SHOCKED

DEAR SHOCKED: Deposits in Ontario seem to be regional, and just like home prices, they tend to be larger the closer you get to the GTA. In communities a few hours out of Toronto, a typical deposit may be as little as one or two thousand dollars. In a perfect world, the seller receives a deposit large enough to ensure that their buyer doesn’t walk away from the deal.

PRO TIP: Because a buyer is signing under seal, the size of the deposit has no effect on their contractual obligation; they are equally committed whether the deposit is large or small. That said, it might be easier for a buyer to walk away from a $1,000 deposit with a “just sue me” attitude than it would be if the deposit was $10,000 or $100,000. #AskDavid #Advice