Domestic Divorce Attorney

Michigan Divorce Process

BREAKING UP IS HARD TO DO, BUT REAL ESTATE MAY BE EVEN HARDER.

By Rachel L. Terpstra, PARMENTER O’TOOLE

Unless you have been living under a rock for the last two years, you’ve likely noticed the significant downward real estate trend. Even the popular home and garden network HGTV has picked up on the trend with new shows like “Real Estate Intervention”, “The Unsellables” and “Buy Me” detailing the woes of current sellers in the real estate market. So what do you do if you are going through a divorce in the midst of this real estate crisis?

For most Americans, the marital home is the largest asset to be divided in a divorce. It can also be one of the thorniest issues to deal with in the divorce for numerous reasons. Especially in today’s market, the family home can be a very difficult asset to value (and in the current market that value may change significantly as quickly as within 60 days). The home also may not be readily saleable. For many, emotional and sentimental attachment to the home can also cause problems and irrational choices when it comes to making good decisions regarding what to do with the family home.

In order to determine which option will work best for you, you need to ask yourself several key questions: How much equity (if any) is in the home? Do you want your children to remain in the family home? Can either of you afford the home on your own, permanently or temporarily? Based on your answers to these questions, there are several options when facing this dilemma:

• Sell the Home. Selling the home may be the cleanest, simplest way to go about dividing the asset. This is often a good solution when neither party is able or willing to carry the full burden of the mortgage or there is significant equity in the home to be split among the parties.
• Keep the Home. In some cases, one party has the ability to refinance and simply “buy out” the other party. This option can work well if one party has an emotional attachment to the home or wishes to keep the children in the family home. However, this option is only viable if the partner remaining in the home is able to qualify for a mortgage on their own.
• Sit on the Home. In the current real estate climate, some soon-to-be-exes are instead choosing to delay the sale or “buy out”. Due to the state of the current market, some couples have chosen to follow a wait-it-out approach, instead working out an agreement to delay the sales process for a specified number of years or both moving out and renting the home until the value stabilizes. Although this may initially seem like an attractive option for homeowners who are upside down, the couple must be prepared to deal with the issues of on-going maintenance, future improvements, real-estate commissions and how to split the proceeds from the eventual sale.

Regardless of the option you choose, it is important to realize there are significant consequences to each option and it is important that you have an attorney help guide you in the choice that is best for you and your family.