Whether you can blame the pandemic for driving couples apart or not, it seems like a lot of people are splitting up these days. Divorce is a trying and emotional process, and adding real estate to the mix makes things even more challenging.
This CBC article discusses how the current housing market and high renting costs make it even more difficult for couples to separate.
Whether it’s your primary residence or investment property, things can quickly become contentious when assets like real estate have been built together.
There’s almost always an emotional attachment to a home, especially if you’ve lived there for a while and it’s where your children were born and raised. Much more than bricks and mortar, a home is full of memories, and emotions get wrapped up in liquidating assets.
Navigating Divorce and Real Estate Assets
As a real estate agent in Milton, living in a town with among the youngest average age and the highest number of young families, I know that divorce and separation have become prominent reasons our clients sell real estate. I’ve experienced a range of situations, from very amicable separations to very nasty and hostile.
Tips for Real Estate Agents Working With Clients Amidst a Divorce
Since it is such an emotional time, your clients may look to you for guidance on more than just real estate. Stay in your lane, and don’t give advice on things you’re not qualified to counsel on. Be mindful of what you’re saying, how you’re saying it, and who you say it to.
As a licensed professional in an agency with the divorcing couple, it’s important that both parties be treated equally and fairly, regardless of your personal opinion of the matter, and regardless of if one party is being more cooperative than the other. I would always recommend documenting communication via email, text message, and taking detailed notes. Communicate with both parties equally, do not hide information from either party, and refer them to legal counsel immediately for all things non-real estate related or when disputes need resolution –stay in your lane.
How to Select a Realtor During a Marital Breakdown
No two scenarios are alike, so you’ll need to use your best judgement, but generally speaking, if a couple cannot agree on a real estate agent, they should find an unbiased way of selecting one. One option is to interview several agents, narrow it down to three, and draw a name for the final selection. Alternatively, you can hire your own representation.
Co-Listing Real Estate
We’ve handled situations where the husband and wife wanted separate representation, so they hired individual agents from two separate brokerages, which co-listed the property. This way, the owners could communicate with their preferred agent, and the real estate agents handled everything together. This provided the homeowners with peace of mind, knowing that there was no conflict of interest, their agent had their best interest in mind, and it limited communication between spouses who faired better not communicating with each other.
In many marriages, there’s one person who’s more responsible for the financial components of the union. If that’s not you, it’s important to understand your mortgage, debts, and overall financial situation. Once a couple decides to divorce, any trust often gets left by the wayside. It’s of benefit to you both to be transparent with each other. Everything will come out eventually, and it will be much more cost-effective if you can work things out without getting lawyers involved.
Investment properties can be the trickiest type of real estate to get out of in a divorce. Particularly if there are tenants living there. You’ll probably have to find an investor willing to take the property with the tenant. It adds another level of complexity. Taxes on capital gains can be significant and have to be paid. How will that be split? It all speaks to the importance of dealing with professional realtors and lawyers to ensure you’re going through the process properly.
Go to 17:17 in the podcast to hear Steve’s answer to the first thing he would do if he were getting divorced.
Government Assistance for Divorcees Buying Real Estate
Not only is selling real estate during a marital breakdown very challenging, but buying real estate has its own set of obstacles. For many households, one of the two partners or spouses is the predominant or only income earner. This can cause challenges for both parties when purchasing real estate after the sale. If the primary income earner has to provide supplementary income via spousal or child support, this can quickly make it infeasible to buy back into the market. For individuals earning less or no income, it can pose a stressful situation where a career and lifestyle change is forced on them.
Albeit small in the grand scheme of things, the federal governments Home Buyer Plan also applies to individuals who are subject to a marital breakdown of a marriage or common-law marriage within the last four years. This would entitle individuals to leverage an interest-free and tax-free withdraw from their RRSPs up to $35,000 to be used as a downpayment on a property, which can be repaid over the next 15 years.
Divorces and separation are never fun, neither was this where you thought you’d be when you recited your wedding vows. However, here you are. Look to the future for green pastures, strength and purpose, and lean on family, friends and a great team of professionals to help you through every step of the process.
Here’s our friendly Artificial Intelligence’s to on the challenges of dealing with real estate during a divorce:
- Ensure open communication
- Consider hiring a neutral third-party
- Hire separate real estate agents
- Understand your mortgage
- Get an accurate home evaluation
- Decide on the profits or debts
- Consider the timing
- Emotional detachment
- Staging the home
- Protect your credit
