Another option is to use a Realtor that specializes in divorce. While any Realtor can provide a market comparison, an agent with a divorce specialist designation will appreciate the intricacies involved with listing a home for sale as part of a divorce settlement. Just be aware while real estate agents are professionals in their field, they are not trained appraisers and can only offer letters of opinion when it comes to a market valuation on the home.
When determining a property’s current market value, it’s the separation date that is used as the valuation date. This can be a problem if the home is located in a hot or volatile market, such as Markham, Ont., or Vancouver, where property prices can fluctuate as much as 10% from one selling season to the next. If the home does appreciate or depreciate dramatically after the specified separation date, it may be necessary to re-negotiate with your soon-to-be-ex, so that you may both agree upon another date for the market comparison.
If one spouse is buying out the other on the matrimonial home and there is a mortgage on the property, then there are two options. The first is to remove one spouse from the mortgage. This option comes with legal fees, appraisal fees and a discharge fee from your existing lender. To take this option, however, the following conditions must be met:
- The couple must be up to date on their mortgage payments;
- The spouse remaining on the mortgage must have a positive credit score and history, as well as sufficient income to assume the mortgage.
Another option is to keep both spouses on the mortgage during the separation period. While this option incurs no additional costs, it does mean that both parties will remain legally responsible for the mortgage debt, even if only one person is still living in the home. Also, for the spouse who chooses to move on and buy a new place, be mindful that the loan on the matrimonial home will, in most cases, need to be legally removed before you can obtain a new mortgage for a new property.
For the final two options—keep the property as a rental investment, or convert it into a duplex where both parties reside in separate units—both parties will need their own lawyers in order to draft and finalize a contract and agreement that stipulates who is responsible for what and how decisions will be made. Be mindful that these two options are really only available if both you and your ex are on exceptionally good terms and won’t mind making major financial decisions together in the future.
Who pays for what during the separation?
While it’s becoming more common for both parties to remain in the same home during a separation (often to save money), typically, one spouse will leave the matrimonial home and find temporary rental accommodation elsewhere. When this happens, both spouses must come to some agreement on who pays for what, and when. Usually, both parties will continue to make mortgage payments and cover household expenses (along with spousal and child support) during the separation period.
Keep in mind, however, that everything is negotiable. Deciding who pays for ongoing home expenses during the separation, who foots the travel costs to see the kids, even what utilities and discretionary expenses will be paid and by whom, are all part of the process.
Sadly, this is when nasty tactics might occur. For instance, the spouse who leaves the marital home can stop making mortgage and housing payments, or be routinely late in making those payments. It’s a technique designed to hurt the other spouse, who is relying on those payments, so that any settlement, even an unfair settlement, will start to look good. But don’t be fooled. Even if your soon-to-be ex is unco-operative or withholding financial support, it’s possible to proceed with a divorce and to sort out the family home.