Selling Your Home In A Divorce?
5 things you must know before listing your house in a divorce…
During a divorce, you’ll likely have many questions concerning what happens to your home, your current mortgage and even your credit rating. We are here to help educate you on all available options. Divorce is different for every couple. No two couples or situations are exactly the same, there is no “one-size-fits-all” approach to fairly resolving the division of a couple’s marital assets and liabilities. We can provide a free consultation including a comparative market analysis of your home (CMA) to help give you the answers you need to make the best financial decision.
What are the first steps to take before listing your home in a divorce?
The important steps to take before you list your house are to speak to your lawyer or mediator, financial planner, tax professional and realtor to make sure you understand all the financial implications of the sale. Emotional distress makes people make bad decisions. Don’t rush into things.
How does a divorce impact my credit rating?
Unfortunately for many, divorce is a time of great financial hardship and credit challenges. Because you are responsible for the mortgage until it is paid in full or refinanced, it is imperative to remain current on the monthly payments to avoid adversely affecting credit scores. In the event both spouses are on the mortgage and one of the spouses wants to keep the house and isn’t able to make the mortgage payments and pay the property taxes, both spouses credit scores can be negatively affected.
What is “FLARPL” - Family Law Attorney Real Property Lien?
If you are unable to come up with the initial attorney fees for the deposit and/or the supplemental deposit later in the case, you may wish to ask the attorney if they will accept a FLARPL. In short, you are promising to pay the attorney for the legal services they provide and securing your promise by granting them a lien on your home (i.e., a promissory note secured by a deed of trust).
A Family Law Attorney Real Property Lien (FLARPL) means the client gives his/her attorney a lien against his/her share of the joint real estate property in order to cover attorney’s fees if he/she is low on cash. As long as the home is community property and the attorney would be satisfied that adequate security exists in the home to secure your promissory note, the FLARPL would attach to the interest in the property.
Once you understand your rights and responsibilities under FLARPL, you sign the necessary documents and return them to the attorney. A notice of FLARPL would then be sent to your spouse and the court to provide an opportunity for a spousal objection to be made. If no objections are made to the notice, the attorney would record the lien in the county recorder's office. The attorney would then represent you throughout the divorce proceedings without worrying about being paid for their services. When the spouse pays their legal bills, the attorney releases the lien on the property and the lien no longer exists.
Do I need to be careful who I tell I am getting divorced or separated when selling a home?
YES! One thing home buyers like to ask is, “Why are they selling?” Make sure you have a good answer, otherwise you could give up some leverage. Buyers might assume you have to sell quickly and offer less than they otherwise would have. It would be wise not to advertise the divorce to the neighbors as buyers and their agents may talk to the neighbors about the sale of your home when inquiring about the neighborhood.
No one is suggesting you lie, but think of a more positive spin to leave more room for negotiation. A response you might offer is “we’re downsizing.”
Can I buy a new house or fix the house while the divorce process is ongoing?
Yes, though it may not be a good idea to buy a new home or fix the family home while the divorce process is ongoing. Why?
Buying a new house – Your ex can claim interest in your new home if you didn’t purchase it as a separate property during the divorce.
Fixing the house – Before performing any major repairs or renovations on the family home, make sure you have a written agreement that clearly states how/when the spouse footing the bill will be reimbursed later.
If your name is on the mortgage, it might make it harder for you when applying for a loan to buy your own home during a divorce. It is easier to get your name off the deed, but not off the mortgage. Consult an experienced lawyer about how these actions could negatively impact you – or for ways to ensure that they can’t come back to haunt you – before embarking on renovations or making an offer on a new place.
There are important issues that need to be agreed on when listing a home in a divorce?
Both spouses need to agree on price and scheduling before you sign the listing in a divorce to avoid hitting a bump in the road mid-sale.
Other decisions to talk over with your spouse and to consult with your realtor are:
Who will remain in the home or will the home be vacant?
How will payment for any repairs or services be handled?
What services like cleaning, minor repairs, and painting will be handled by each spouse or will the services be hired out?
How involved in the day-to-day marketing updates of the home does each person want to be?
What are each spouse’s specific responsibilities in terms of the home sale?
How much notice does each spouse need for a closing date?
What times are off-limits to accommodate showing requests?
What negotiations of the home are important to each spouse?
If you have additional questions, I am happy to help.
Referenced by Audrey Ference, David L. Miller, Lee A. Drizin, Emile L'Eplattenier & Joe Dillion.