By Tracy Fischer – June 2013
Many divorce agreements drafted over the past few years provide for joint ownership of the marital home, with one party residing in the home usually with the children. Often when these arrangements are made, parents want to maintain stability for the children, trying to keep the same school system and friendships. One spouse may not be ready to make the decision about where to move. Situations have occurred over the past few years where it would not be financially feasible to sell the home because property values had decreased. The person who does not live in the home is usually not financially responsible to pay the costs of the home, but may be responsible for larger necessary maintenance and repair costs.
Often agreements provide for a specific length of time that the house will be owned jointly before there is a buy-out or sale. This length of time can be increased or decreased by agreement of the parties. The party who does not live in the home may be unable to purchase a new home because of equity that is tied up in the jointly held property or because of the mortgage which remains in joint names.
Given the low inventory of homes on the market in a variety of price ranges, this may be the time to consider whether a sale or buy-out of the home makes sense in your situation. For the person who resides in the home, this may be a time to consider a buy-out if there is a desire to remain in the home longer than the time frame negotiated at the time of divorce. With mortgage rates so low and property values still reasonable, this may afford one parent the opportunity to own the marital home that could not be bought out at the time the divorce occurred. The person who wants to retain the home has the opportunity to negotiate a more favorable price if the buy-out occurs earlier than expected. Also, the fact that there would not be a broker’s fee would provide another area of negotiation.
For the ex-spouse who does not live in the home, the opportunity to receive their share of the equity sooner rather than later is beneficial so they may be more willing to be flexible regarding the fair market value of the home. A sale would enable the non-resident homeowner to potentially purchase their own home, perhaps providing a more stable environment for the children when they are with that parent.
“Homes in many communities are selling quickly and with multiple offers. Sellers can often virtually choose their sale price, closing date and additional terms. This scenario gives ex-spouses the opportunity to work together and make decisions that potentially benefit both of them. “ says Margie Gundersheim, a realtor and top producer at Keller Williams Realty in the Boston suburbs, who frequently works with separated and divorced couples to navigate the sale of their home.
Post Divorce Mediation is a process by which joint property owners can be assisted through these complex discussions in light of what the divorce agreement provides for and what legally and financially makes sense in these negotiations. The mediator is a neutral professional, oftentimes a lawyer as well, who can draft a written agreement detailing the terms of the modification.