Knowledge Base

Vacation Homes in Divorce,
An Asset or a Liability? 


June 1, 2014
Written by Lynne C. Halem

The marital home may not be the only real estate that requires consideration at 
the time of divorce. What to do with the family vacation home or homes is a frequently asked question, one that may not produce ready answers.

Some couples own timeshares, which they consider the family “vacation spot.”  When these real estate investments are actually used, or exchanged for other vacation destinations, they often become a meaningful asset to the family. In other situations, the timeshare goes virtually unused, building up service, membership, and even mortgage fees that may go unpaid for months or years.  Over time this type of real estate investment has decreased in value, making the sale of timeshares a difficult undertaking.  Couples often relinquish them in exchange for outstanding debt on the property or try to sell them for pennies on the dollar. In summary: when regularly used, timeshares can provide a needed family retreat; when unused, they present a drain on revenue and often engender regret for dollars wasted.

Properties with little or no value pose more of a problem in the division of assets than real estate that will generate a profit upon sale. Vacation homes are easier than timeshares to sell, although the 2008 recession hit vacation properties hard.  As a result of the market correction, many families own homes in which their equity in the property is less than the outstanding mortgage balance, making it difficult to sell without outlays of cash to make up the monetary shortfall. Couples in this untenable position may agree to share usage and operating expenses until the property has a saleable value; or one spouse may agree to keep the property, receiving other assets or payments to offset the "under- water" real estate.

To Keep or Sell the Vacation Home: Not a Simple Question

Working Toward Compromise

Regardless of the arguments posed for keeping or selling the family's vacation home, the couple is faced with the task of determining the disposition of this asset. In the final analysis, the parties have to weigh eachother’s needs, concerns, and priorities in conjunction with sources of income and budgetary requirements. The 
retention of a vacation property may be reduced to a dollar-and-sense solution: is this an 
asset that is affordable to the couple or to either spouse as an individual?

Let's take a look at some of the choices made by divorcing couples in mediation:

Mediation: A Forum for Balancing Need and Priorities

In an effort to structure an agreement that is fair to all involved parties, it is especially important to evaluate the basis for each party’s preferences. The mediator takes an active role in helping couples explore their options and weigh the family’s needs and priorities. The mediator leads the couple in an analysis of the following considerations:

In mediation, couples need to view the entire picture, currently and in anticipation of future changes. Stepping outside the here-and-now helps the parties to fashion an agreement that is neither shortsighted nor overly optimistic; an agreement that makes sense not only at the time of divorce, but also in the years to come.

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