15 Oct WHAT HAPPENS TO REAL ESTATE UPON A DIVORCE?
Many divorces involve at least one piece of real estate, most often the family home. Parties may also own rental property, vacation homes, commercial real estate, land, industrial property or any other type of real estate interest.
Each property owned by one or both spouses will need to be identified and addressed in a divorce. It is important to understand your options and the implications of each option when you are considering what to do with real estate that you own.
The most common ways real estate is dealt with in a divorce include awarding the property to one spouse, selling the property, or continuing to own the property jointly with your ex-spouse.
Award to One Spouse
Real estate can be awarded to one spouse in a divorce subject to an equitable distribution of any equity or value the property may have. In other words, subject to a buyout of the other spouse.
If choosing this option, each spouse will want to make sure the buyout amount is fair and that all necessary terms are included in the divorce decree as relates to an award of real estate compared to other property items.
You will also want to be sure that the deed and any loans are adequately addressed. If a loan is jointly held, the spouse keeping the property will most likely need to refinance to remove the other spouse’s name. Only the lender—not even a court order—can remove a party from a mortgage.
If neither party can afford to keep the property, or neither party wants the property, the home will be sold.
A sale seems like a simple solution, as then there is no question about the value of the property (the value is the sale price) and there is no refinancing issue.
However, orchestrating the actual sale can be complex if the property does not sell quickly or if the parties are not on the same page. Getting a property ready for sale, maintaining the home pending sale and for showings, paying bills until the home sells, and making decisions about the sale all require a lot of decisions and efforts to be made by both spouses.
Continue Owning Jointly
A final way property may be handled in a divorce is for the parties to continue owning the property jointly even after they are divorced. This is a less commonly used option, although in some circumstances, parties may decide it is their best or only choice for at least some duration following their divorce.
If parties are going to own a property jointly after a divorce, it is imperative that all proper terms and considerations are included in your divorce decree in an effort to reduce conflict going forward and to ensure the property is maintained.
At Baer Family Law, Rebecca offers creative and detailed solutions to accomplish her clients’ goals and protect them moving forward. Rebecca has a network of trusted experienced Realtors, lenders and appraisers to assist with real estate disputes and dispositions when needed.
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Authored by: Rebecca R. Baer, Esq.