Selling shared real estate during a divorce is often necessary. Real estate is frequently the most significant asset a couple owns, and when it comes to an equitable division of marital property, selling a property and dividing the proceeds from the sale is sometimes the only option.
Furthermore, selling shared property can help couples achieve the complete financial separation they need to move on from their marriage. However, we also understand that selling a shared home, vacation property, or investment property can be emotionally fraught, especially when you face selling in an unfavorable housing market.
You may have alternative options should you not wish to sell your shared real estate, including:
- Co-ownership: Both parties retain ownership of the property and agree on terms for its use and maintenance.
- Buyout: One partner buys the other's share of the property, becoming the sole owner.
- Trade-off: One partner keeps the property while the other receives assets of equivalent value.
- Leasing to a third party: The property is rented out, with income either shared or allocated towards other joint financial obligations.
When dealing with jointly owned real estate during a divorce, it's a good idea to explore all options. However, remember that not all options are created equal, and you should consult with your legal and financial teams to identify the options that serve your best interests.
Preparing to Sell Your Property During a Divorce
When considering selling your property amid a divorce, you should be aware of the potential need to obtain the court's permission before proceeding with the sale. This is especially true in contentious situations where the divorcing parties struggle to come to terms.
Consulting with a real estate agent experienced in divorce-related property sales can also provide insights into market conditions and help set a realistic selling price. Furthermore, ensuring all financial obligations, such as mortgages, taxes, and utilities, are adequately handled or apportioned between the parties is essential for preventing legal or financial complications during the sale process.
Are We Required to Sell Our Shared Real Estate?
In certain divorce scenarios, a judge may mandate the sale of a property to ensure an equitable division of assets among the divorcing parties. This situation is often called a forced sale.
A forced sale can arise when:
- Parties are unable to agree on the distribution of assets.
- The property cannot be divided without selling it (due to its nature or value).
- Selling the property is necessary to settle debts or financial obligations tied to the marriage.
Additionally, if there are concerns about one party’s ability to maintain the property or it's considered financially imprudent for either party to retain the property, the court may order a sale. In essence, the court's priority in mandating a sale is to protect both parties' interests and ensure a fair settlement.
Considering Co-Ownership Post-Divorce
While co-ownership of real estate post-divorce may seem like a viable option for maintaining a shared investment, particularly in cases where selling the property is not feasible due to market conditions, it's crucial to proceed with caution. Co-owning a property with your former spouse can introduce potential issues that warrant serious consideration.
Potential issues with co-ownership include:
- Ongoing financial ties: Co-ownership keeps you financially tied to your ex-partner, which can complicate new beginnings and financial independence.
- Disagreements on property management: Decisions regarding maintenance, tenant selection, or reinvestment can lead to disputes, straining post-divorce relationships.
- Division of expenses and profits: Unequal contributions to expenses or disagreements on profit distribution can create conflicts.
- Impact on future relationships: New partners or spouses may be uncomfortable with ongoing financial entanglements or shared responsibilities with your former partner.
In conclusion, while co-ownership can be a strategic move in certain scenarios, it requires careful planning, clear agreements, and an understanding of the potential pitfalls. Consulting with legal and financial advisors to structure a co-ownership arrangement that protects both parties' interests is essential.
If you are going through a divorce and are struggling with dividing real estate assets, turn to our firm for guidance. Contact Ford & Friedman online to schedule a consultation.