Selling a house during or after divorce can be fraught with emotions but is an important part of moving on and beginning the next chapter of your lives. I’ve worked with numerous clients in the process of separation or divorce and appreciate the fact that it’s a difficult time, even if the breakup is amicable.
A house is often the most expensive and valuable piece of property that a married couple owns but it’s often so much more than that – it’s the place where a couple raised their family. They may have even invested considerable sweat equity in the house over the years. It’s only natural to feel vulnerable, overwhelmed and unsure about who to trust as they weigh their next steps.
REALTOR EXPERIENCED IN DIVORCE
While it’s always helpful to have an experienced realtor on your side when buying and/or selling a house, a compassionate realtor with experience selling houses as part of a divorce can be invaluable in these circumstances. Each party needs to know their realtor is completely neutral. That means she doesn’t represent one side or the other and will communicate equally to both parties – even if that means having the same conversations twice. An experienced realtor understands the importance of keeping the divorce under wraps so prospective buyers don’t assume it’s a fire sale. If the divorce is acrimonious, she can use her skills to ensure conflict doesn’t hinder negotiations on the sale of the house.It’s also advisable for a couple to talk to their respective lawyers and mortgage brokers so they have a separation agreement in place when it comes time to sell and know how much they qualify for if they plan to buy a new house – though it’s sometimes wise to consider renting for a year until the dust settles before taking on such a large commitment.
DECIDING TO KEEP THE HOME
Of course, there are several options in addition to selling. One partner may decide to stay in the home, which means s/he will need to buy out her/his former partner. In some cases, you may need to refinance your mortgage to give your ex-partner a lump-sum payment.Your lender will require you to re-qualify for the mortgage on your own, you’ll need to prove you can afford to make the mortgage payments, the Financial Consumer Agency of Canada (FCAC) advises. You may need to provide the following:
- a separation agreement (if you have one)
- the amount of any child support payments
- the amount of any spousal support payments
If you don’t qualify for a mortgage on your own, consider asking someone to act as a joint borrower or guarantor. This person should have a good credit history and income. Before co-signing, make sure you both fully understand the responsibilities involved.Once you’ve qualified for the mortgage, you’ll need to remove your former partner from the home’s title and release her/him from the mortgage. If you don’t release your former partner from the mortgage, s/he could continue to be responsible for the mortgage payments.
RULES FOR COMMON-LAW COUPLES
When a common-law couple separates, both partners don’t have an equal right to stay in the family home, FCAC notes. Generally, any property you brought into the relationship or bought during the relationship remains your own.This means the person whose name is on the title of the home stays in the home. If both names are on the title, you’d need to either sell the house and divide the money or one partner would need to buy the other one out. If you don’t have a cohabitation agreement, you may want to use a lawyer or mediator to help you decide how to divide the family home.
THE COST OF LIVING APART
Your daily living expenses will likely increase when you live separately. Maintaining a home on your own is more expensive than sharing the costs, FCAC reminds. For many people, this means having less money to spend. A budget can help you make the most of the money you have. Get tips on how to make a budget.