6 Real Estate Mistakes Not to Make During a Divorce
Nobody likes going through a divorce and while it might be a better outcome on the other end, while you're in the middle of it, it can seem like hell. However, when you throw in real estate, not to mention kids, joint-owned property and etc., it can add even more confusion to the mix. If you're dealing with property during the divorce, here are seven mistakes you don't want to make it comes to real estate and divorce.
#1. Challenges when one spouse keeps the house.
Real estate ownership and mortgage issues can always be a problem when dealing with divorce and real estate. If one spouse is trying to keep the home, there are two main factors that will drive your decision-making, affordability, and the deed.
Who is going to keep the house, are they going to keep the house, and how is the one keeping the house going to pay off the other? When you break down the monthly expenses for the property compared to the maximum possible support payments the client would receive, it may or may not work out in the affordability factor. A good way to do this is to refinance the mortgage and remove the spouse from the financial burden while leaving both names on the deed to cut down on paperwork. There are several ways to do this but if you have an uncooperative co-owner on your hands, it can be even more painful.
Unless a divorce agreement explicitly states shared ownership and who is responsible for what part of the property, it's best to go through the steps to remove the spouse who moves from the deed. It's also best to cut all ties to avoid any potential financial or legal liability down the line.
#2. Not selling the house.
To avoid major real estate regrets, sometimes it's best to simply sell the house, split the profits, and go their separate ways. If affordability is an issue for one or both parties, selling the house can provide a fair share of the profits from the deal for each party. This might be able to be reached amicably but fiery tempers in the midst of a divorce can make listing the home problematic. If the two parties cannot come to an agreement, it will need a court order to mutually decide that they're going to sell the property and how to go about doing so.
#3. Not buying out the other person.
Simply selling the house is not always the easiest decision, especially when there are kids involved. Many folks feel that they can buy the other person out and leave the spouse is going to have the children the majority of the time in the home. This might require an appraisal of the property to determine its current value and then the deed can be transferred to sole ownership of the paying spouse. If the paying spouse has enough money to do so, they may be able to refinance the property and pay off the other party.
#4. Not signing over half of the house.
Another option is the agreement that one spouse can keep the house without having to pay their acts but you'll need to verify that all ownership documents get signed at the same time because there's no guarantee is split will remain amicable. If one party is signing over the house, it's best to do this as quickly as possible.
#5. Consider nesting.
This is an interesting option that could definitely result in a mistake… Or not depending on how amicable the parties are. This is also referred to as "bird nesting" which is an option for divorcing couples with children to minimize the impact on the children. The couple continues to co-own the house, live separately within the house, or the parents will switch off who stays in the house with the kids each week. This needs to be written in the divorce agreement and usually, a family therapist is involved.
#6. Not selling in the future.
Sometimes the best option is putting everything on hold and selling in the future. If you don't want to create a long-term financial burden for either party, you might wait until the youngest child finishes elementary school or the local housing market is in more of a prime position to facilitate a lucrative sale. This means that selling in the future might be better for both parties but this needs to be agreed upon in writing to prevent any legal issues down the line. Of course, this can also leave a lot of room for applicability to fall by the wayside so it's typically better to do things sooner rather than later.
I've worked with dozens of homeowners that have dealt with a divorce and with the right communication, the right lawyer, and the right real estate agent, parties cannot move on with their life, get the home sold, or transfer ownership favorably and with his least stress as possible. If you are facing a divorce and not too sure what to do with your Columbus area real estate, contact my office. We can discuss options and possibilities on selling or converting the home is necessary.