What was the law?

I was also a little confused as to why the house was being ripped apart. I knew his father was worried about it.
I do not think it had anything to do with the parents' separation though.
Also, in the end, were they ripping apart Tom's house, too?

I only saw them tearing down Ellis' parents' house.

The most I got from "the law' was that, if the wife left the house, being the one whose name is on the title, then the government can take the house. It must have something to do with the house being a bot on the river. Sometimes laws are passed outlawing a practice (like living on a river) and existing structures are "grandfathered' in. That is they are not evicted, but no more can do it, and when they all die off, no one else can move in.

This is just an assumption on my part.