Going through the process of divorce is difficult enough, then adding selling your Boston condo, really ramps up the stress. There could be lots of emotions involved in both the marriage split and decisions over what to do with the home.
Today, I’ll review some of the issues you could face when selling downtown Boston real estate during a divorce. In addition to what you can do to make a difficult situation as easy as it can be.
One of the most difficult aspects of a divorce is deciding what will happen with the marital property. Perhaps one spouse wants to remain in a downtown condo, but can they afford to do so? If both parties want to stay in the home, it can make things even more difficult and costly. It may have to be decided in the courts if a decision can’t be mutually agreed upon.
If you have a mortgage on the downtown Boston real estate, it is likely to be based on two incomes. Following a divorce, the spouse remaining in the home will need sufficient income to cover the cost of the mortgage. There aren’t just mortgage payments to consider, there are also property taxes, insurance, as well as maintenance and condominium fees. This could leave the person wanting to remain in the home in financial difficulties. Even if they are the higher-earning of the two it can still put them in a difficult financial position.
While an agreement might be reached over who is to remain in the home and pay the mortgage, the lender will still consider both people responsible for the loan. The only way to avoid this is to refinance the property. By doing so it will remove the spouse no longer residing in the property from the mortgage.
If the spouse who wants to remain in the home can’t qualify or afford the payments there is another option. An arrangement can be made where both parties remain on the mortgage. Co-owning the home might mean the person moving out paying a certain percentage or continuing as before. This can be a good idea to avoid disruption where children are involved but does have risks.
It does involve a lot of trusts and could ultimately be problematic. If one party fails to keep up their side of the arrangement it can create credit issues for both parties. The person moving out could also have more difficulty getting a mortgage, as they will need a higher income to meet debt-to-income requirements.
It is natural for lots of emotions and memories to be tied up in a home. This can lead people to decide to sell the home during a divorce. Even if one person remains in the property, they might find it too difficult to live with the memories, either good or bad, that are associated with the home.
One side might fight to stay in the property, only to discover that they don’t want to live there anymore later on. If you think you want to remain in the home, you have to consider the emotions tied up in the property.
If neither spouse can afford or wants to continue living in the home, or an agreement can’t be reached, the home will have to be sold. To get the best price for the home, both parties will need to cooperate. This won’t necessarily be easy, but if one person decides to not help in the sale it will negatively affect both.
Worst-case scenario, a court order can be granted to ensure cooperation with the sale. Documents will need to be signed, and the homemade ready for sale. This could mean some repairs are needed, and if it can’t be agreed on who will cover the costs, the home could be sold as-is. This is far from ideal, however, and will mean a lower price is paid by the buyer.
More consideration to the selling price may need to be given. Of course, both spouses want as much money from the sale as they can, but pricing the home higher could lead to it sitting on the market for longer than it needs to. This, in turn, makes it harder to sell, with potential buyers thinking there must be something else wrong with the home other than the above market price.
There is an exclusion of $500,000 for married couples when selling a home. This is cut in half for single people. It may, therefore, be better to sell the home before the divorce goes through if you are affected by this tax.
If you have owned the home for a long time, this could add up to significant savings, and something that should be considered.
When you are going through the divorce process, you need a real estate agent that understands the situation. They will need to keep both spouses informed and be aware of the particular problems that could occur.
They should act in an unbiased way in their dealings with both spouses. Both sides of the divorce should feel that they can trust the Realtor to represent them fairly.
It’s not uncommon for the spouse who chooses the Realtor to have a better relationship with them. If this happens, it can lead to disputes and lack of trust from the soon to be ex. Make sure the agent is fully aware of the divorce and works equally with both parties.
Because of the potential for problems and disputes during a home sale when divorcing, you should keep your attorneys informed. You might not need much help if there is no dispute over how your assets will be divided, but if this isn’t the case, they will need to be involved.
It will be particularly important for your Realtor to work with your attorneys if communication between spouses is difficult. They can avoid problems that could hold up the sale, and make sure negotiations go more smoothly.
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