Residing With Your Ex: Divorce In A “Down” Real Estate Market
Perhaps the most common dilemma faced by divorcing couples centers on the fate of the marital home. To sell or not to sell is the question pondered by couples and argued by attorneys. While many families would like to keep the house to provide continuity and stability for their children, they often disagree on actualizing this goal. Who stays with the kids? Does one spouse buy the other out? If so, when? For how much?
And then, too, it is not atypical for couples to conclude that the house has to be sold. Here also the reasons are many. Neither party can afford to maintain the house. The upkeep on the house is too difficult for one person. Both parties want the house, yet neither party can afford to buy out the other’s interest. The house, with its equity, may provide the only source of funding for “new” homes: it may indeed be the only asset which can be liquidated without significant penalties.
For these or other reasons, the divorcing couple makes a decision to sell the house. However, in 2007, the decision may not lead to a quick or near quick result. Have you not seen recent headlines?
“House Values Plummet”
“Real Estate Glut – Where are the Buyers?”
“Free Auto Entices Home Buyers”
“Subprime Mortgage Collapse Puts Houses on Auction Block”
There is an increased inventory of houses on the market, a “buyer” population holding out for prices to slide, sellers offering enticements to separate their house from that of their neighbors. In short, the real estate market does not provide sellers with an easy or predictable fix.
As a result, we, at CMDR, are witnessing a new trend – more and more of our clients are living together after divorce, stuck by their inability to sell their home and without funds to finance two properties. With their equity sitting in the marital real estate, they agree to hang in there until they can sell at a reasonable price.
Aside from the emotional sacrifices and compromises which need to be brokered when divorcing individuals remain roommates after dissolution of a marriage, there are a host of other decisions to be faced:
What if one party wants to accept an offer and the other feels it is too low? Is there a “must” sell figure unless both agree to refuse the offer?
What if the house does not sell after one month? Two months? Six months? Do you undertake renovations ? Lower the price?
How is continued ownership financed?
Are more funds needed to keep the house until the sale? If so, from where will the money come? (Refinancing? Personal loans? Retirement funds?)
Although the questions keep multiplying, the asking is quite important. Living together after divorce is by no means easy. It tests each party’s ability to compromise, to cooperate, to look the other way. It requires patience and even kindness. Interestingly, it may pave the way to a kinder, gentler, post-divorce relationship that, in and of itself, would make the tension and hassle worthwhile.
Couples facing this situation would be wise to include in their divorce agreement concrete terms for staying in the house together. They should be thoughtful and specific. A clearcut agreement will save much angst, as well as dollars.
Please Call Our Office For Answers To Your Questions – 781.239.1600