In the process of divorce, real estate is just one of many hurdles to jump over. Real estate owned by a couple is often their biggest asset, or their biggest liability. For this reason, tension, emotions, and frustration run high when trying to adequately and amicably divide real estate property. As an experienced agent, I have worked with several couples who find themselves faced with divorce, and in turn, must decide how to handle their real estate. If you are able to work together with your partner to come up with the best solution, this process can be much easier, and less expensive for everyone. There are several options for splitting real estate:
1. Sell It. Selling the house is generally the best way to make a quick and clean break. The proceeds are divided between the parties. How those proceeds are divided is to be determined either agreed to by the parties, or decided through their legal representation in the courtroom. Selling the house is the easiest way to get the property in real money form, then the decision comes down to pure numbers. If the house is underwater, or if one party wants to keep the house, selling the house may not be an option.2. Move Out (or Stay Put) Oftentimes in divorce, one party wants to keep the house. Whether for the children, the location, or a myriad of personal reasons, one party is often unwilling to move. This can make things more complicated, but still possible to negotiate. If you want to stay in the home - the best way to achieve that is to buy out your partner. That means paying them what they would have received had you sold the home. This requires an appraisal, and an agreement on dollar figures once the house is valued. This also requires you to either have the cash, or take out an additional loan in order to provide the money upfront. Once this is settled, the other party will be removed from the mortgage, which means whoever stays in the home must have the income to pay the mortgage payment, or the credit necessary to refinance.If your partner wants to stay in the home – If your partner wants to stay in the home, but they can’t afford to buy out your equity, it might still be worth it to walk away. Many times, simply taking your name off of the mortgage and having relief from that liability is reward enough. However, it is important to note that lenders are not always keen to removing one party from the mortgage. Even if you have a legal agreement in writing, the lender is not a party to your divorce proceedings and so it is important to actually have the remaining party refinance as a sole owner in order to remove your liability completely. You are still liable for the mortgage until the lender removes your name from the loan.ForeclosureToday’s market only complicates things when splitting real estate. Too many families are faced with debt, and not assets when it comes to their property. If the house is worth less than the mortgage balance, the options are less than ideal. Generally, the house can't be sold unless the parties pay the deficiency, and most of the time, neither party has a vested interest to make the payment. The only alternative to this option is foreclosure. If one party wants to stay in the home, even if the mortgage is upside down, they can remain liable for the payments, and avoid foreclosure.If you're facing divorce, or have questions about what you can do to make the separation easier and beneficial for both parties, give me a call. I am happy to go over your options and help you through every step of the way.