In many divorce cases, the most valuable asset is the house. Therefore, it is no surprise that how to handle the house is also one the most important decisions a divorcing couple faces.
There are many possibilities when it comes to property division. But whatever the decision is, this is an area of the Separation Agreement that requires careful consideration. Agreements that plan for as many contingencies as possible reduce post divorce conflict.
The article below hits the major issues. I offer a few thoughts on each.
Proceeds. A division of the equity does not always involve a sale of the property. There may be enough financial resources where one spouse retains future ownership and “buys out” the other spouse.
Timing. The more time the children have lived in the home the stronger the argument is to defer the sale of the home – usually until the oldest child graduates high school.
Occupancy and decision-making. It is crucial to set forth who is responsible for paying the mortgage (its not always the “occupant”) and how carrying expenses such as taxes and homeowners insurance will be paid if these amounts are not escrowed by the bank. In addition, I think it is best to “cap” improvements at a fixed amount. This amount can be exceeded only if both parties agree. For example, a common scenario invloves the real estate agent advising the parties that improvements are necessary to effectivey market and ultimately sell the property.
Maintenance and repairs. The cost of repairs and maintenance should be consistent with the division of equity (i.e. split equity – split repairs). However, this may not be the case if one spouse is solely responsible for the mortgage.
Trouble selling. I believe the list price should be re-evaluated periodically. Where the parties have difficulty agreeing, consider allowing the real estate agent to unilaterally adjust the list price. Alternatively, the Separation Agreement can provide that the list price must be reduced by a certain percentage at certain intervals. I like 3% every 45 days.
Divorce Your House When You Divorce Your Spouse | Fox Business