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The Hardest Part For Divorcing Couples…What To Do With The House

Real estate and legal experts say divorcing couples should set aside their acrimony and get on the same page — whether it’s agreeing to continue living under the same roof, turn the home over to one spouse or sell it.

Stories abound about one spouse cheating the other out of the proceeds. Or one spouse spiting the other by vandalizing the home to sabotage a sale.

A bickering couple unable to get on the same page often means that routine decisions about repairing, marketing and listing the property drag on — jeopardizing a potential sale. Or couples so anxious to wash their hands of the home often undercut themselves by pricing it tens of thousands of dollars below its value for a quick sale.

In a worst-case scenario, the home falls into foreclosure, ruining the credit rating of both spouses.
Except for people older than 50, experts say, the divorce rate in the United States has steadily declined for the past three decades. Still, the battle over a house sometimes can be rough.

Real estate and legal experts say a divorcing couple should set aside their acrimony and get on the same page — whether it’s agreeing to continue living under the same roof, turn the home over to one spouse or sell it.

“Some people are so angry at the other person that they don’t want to do anything the other party wants to do,” said D.C. divorce lawyer Marna Tucker. “But many people are able to step beyond it and say, ‘It’s in both our interests to sell for as much as we can, and let’s cooperate.’ ”

Selling The House…

Divorce lawyer James Cottrell said he’s seen many cases of people throwing their spouse’s clothes on the lawn out of anger.

Ben Hodas, a Miami divorce lawyer who is known for handling divorce cases of the wealthy in South Florida, said he has also seen his share of bitter people, like the person who ripped fixtures and chandeliers out of her home before her husband was supposed to put it on the market. Or another woman who made a hole in the wall of her garage, stuffed a dead fish in there and spackled it back up.

“In most cases when there’s a joint desire to sell a house, each party is equally interested in maximizing the value,” Hodas said. “People want closure, so they have an interest in getting a house sold as quickly as possible.”

Selling a home can be the easiest and fastest way to handle what is likely a couple’s biggest financial asset.
While younger couples with children may be inclined to hold onto their home for a while, older couples and empty nesters tend to sell, according to lawyers and real estate agents.

Before they begin the process, experts say, the couple should plan — with their lawyers if necessary — how the sale will proceed. Hodas offered these tips: Pick a real estate agent who has the most number of sales in your Zip code, rather than a friend. Decide on a list price and if the home doesn’t sell, agree on a time frame to lower the price a certain amount.

But besides such routine matters, the couple would have to grapple with tricky issues related to their marital status — should they sell the house before their divorce goes through? Should they tell the buyers they are divorcing?

Alison Beach, a real estate agent based in Vienna, said agents often share personal information about their clients, such as a divorce, as long as everyone is comfortable with it. This usually happens after an offer on a house is accepted. It can let buyers know that the sellers may take an extra day or two to get papers signed or make decisions about home repairs.

“You want to respect what’s going on and let the buyers’ side know so they’re aware,” Beach said. “We might need an extension as a courtesy. But we keep it vague, we don’t go into specifics.”

As for when to sell, lawyers say couples need to take tax advantages into account such as the capital gains exemption. They advise clients in some situations, for example, to sell the house before the divorce is final.

It can be awkward, experts say, for agents and buyers to do business with both spouses in the throes of a divorce. The couple should decide in advance who’s going to do what and who will pay for what.

For instance, once the house sells, the couple should pick one person to attend the closing and the other can fax over signed documents.

“It usually works best if one party is assigned to work with the Realtor,” said Judi Seiden, a longtime real estate agent on Capitol Hill.

Seiden said when she is working with a divorcing couple, she is sure to keep both people in the loop.
“I always send any e-mail to both parties,” she said. “So much is lost in translation.”

One Spouse Gets The House…

A longer-term arrangement is for one spouse to stay in the home with the children for an agreed-upon period of time, then sell the house. In this scenario, he or she would need to work out details such as who pays the mortgage while the one spouse lives there and how the profits would be split once the house sells.

That can carry a financial risk because nobody knows what the housing market will be when the house sells.

“Some people keep the home until their child finishes high school or junior high,” Tucker said.

Sometimes that can mean selling in a less favorable market. “The event that may lead to a lower price is no different than if you have to move for another reason like a job in a different city,” Cottrell said. “There are many factors that may require people to sell in market they would normally not sell in. It’s a matter of how people have decided to get on with their lives.”

Another option is for one spouse to buy the other out of the house. Sometimes one spouse will have more of a claim to the home, especially if he or she owned it before the marriage.

In that case, there are a few things to watch out for, according Eric Rome, a lawyer who specializes in real estate law in the District and Maryland.

If both people in the couple are on the title of the home, the person who is keeping the house needs to qualify for the entire loan on his or her own. Rome recommends that before a couple decides on that, check with the bank to be sure it agrees to it.

He said he’s had cases in which both parties agree the husband will keep the house, remove the wife’s name from the title and take over the mortgage.

“What if the husband can’t qualify for loan in his own name? The bank may have no interest in taking the wife’s name off loan,” Rome said. “If the wife can’t get off the current note, that buyout is not achievable.”

Rome also said that in a divorce, allow lawyers to examine all relevant documents, especially house titles.

He said he is currently working on a messy case in which a couple got divorced 30 years ago and the woman kept their house, which had been in her family for decades. The husband subsequently died. The woman is now trying to sell the house, and she just realized that her ex-husband’s name is still on the title.

Rome said he’s in the process of legally untangling the situation, which is complicated because the husband’s family may have a claim to the home.

“Tell your lawyer everything, even if you think there’s no issue with the property,” Rome said. “You should make sure these things are dealt with in the process of the divorce.”

Sharing The House…

More and more couples are rejecting the divorce of their parents’ generation and getting creative, especially when kids are involved.

While the divorce rate is steadily dropping, the ways in which people remake their living arrangements after splitting is growing, according to divorce lawyers and real estate agents.

Sometimes, that means delaying selling the home for several years so one spouse can live there.

“They want to keep kids in a stable environment,” Tucker said. “To sell the house is pulling roots out at a time other roots have been pulled out already.”

Other times that can even mean the couple shares the house.

Shares The House?!

It’s called nesting, and some people with kids are trying it out in an effort to cause less emotional disruption for the children, and less financial disruption for themselves. Some couples can’t sell because they are upside-down on their mortgage, said Jody Donaldson, a Chantilly-based real estate agent.

“It has to be an amicable breakup,” Donaldson said. “If the couple isn’t getting along, it doesn’t work.”
Nesting can take any form the couple wants. A guest bedroom can be converted for one spouse to sleep in.

Or spouses can trade off weeks living in the house. On their “off week,” they can rent an apartment or live with friends or relatives.

Generally, families have a timeline to end this arrangement, because a couple that’s splitting up obviously wouldn’t want to live together indefinitely.

Experts say the best way to make that work is to have firm ground rules that everyone agrees on. That includes bigger-picture things such as when the house should go on the market, as well as smaller things such as keeping the house stocked with milk and toilet paper.

Other issues can be trickier but still important to work out, like whether a new girlfriend or boyfriend is allowed in the home.

This option only works if the couple still gets along quite well. “It takes a special couple to pull off the house sharing even for a short time,” Tucker said.