Nobody plans a divorce when they marry.
Divorces can be messy, but selling properties before the divorce finalizes minimizes some of these complications.
To get the most from your property now, at a value you can rely on, selling before the divorce finalizes is ideal.
In today’s blog post, we discuss why it’s beneficial to sell and what steps to take to get there.
Marital Settlement Agreements for Properties
When a couple moves toward conclusion of divorce proceedings, they create a Marital Settlement Agreement. This agreement outlines everything from property and wealth to child custody arrangements and beyond.
Marital Settlement Agreements might outline the later sale of a home based on special circumstances. Once both parties agree and sign a Marital Settlement Agreement, it can’t be broken unless both parties, once again, agree on the changes.
The Trouble with Keeping the House
In some situations, a couple may split up and decide one spouse will keep the house for a set amount of time.
Maybe there are children, and the couple wants them to finish school in the house they grew up in. The couple agrees that one spouse will live there until the youngest child is a certain age (13 or 18 for example) and put this in the Marital Settlement Agreement.
The problem arises when the housing market shifts. Nobody has a crystal ball to solidify property values or interest rates. Divorced couples who put off dealing with properties for later might be surprised when there are significant market changes.
Repercussions of Waiting
If the shifting market reduces the equity in the property by lowering property value, the spouse remaining in the property may be in trouble.
If they were planning to pay off the other spouse’s interest in the property by refinancing, they might not be able to do so anymore.
Now ex-spouses are locked into a mortgage together on a house that’s reduced in value. If the house is foreclosed upon, both parties are negatively impacted. Divorced couples could wind up with nothing from the home they’ve spent so long investing their payments into.
There are still ways for one spouse to remain in the home. It requires payment to the spouse who has left the house for their owed amount of equity in the home. But since for most people, a house is the source of the most amount of cash, if there is no equity in the house, the ability to pay off the spouse who has vacated is a fallacy.
Selling So You Know What You Have
When divorce is on the horizon, strategizing a home sale provides a financial reality to rebuild on both sides. That means, no crystal ball, Marital Settlement Agreements on properties, or concerns over changing interest rates.
Divorced couples who sell before the divorce finalizes know what their home is worth at the time and can plan around it—no guessing about where the market is headed. Working with an experienced real estate lawyer can help you navigate these rocky waters early in the divorce proceedings. The earlier you begin the home sale process, the fewer surprises you’ll have.