Divorce & Your Home – Part 1: Owning the House Together

This is the first of a several part series entitled: Divorce & Your Home.  In this series, I will explain the various options my clients have explored to make best decisions about home ownership when they are pursuing a divorce.  In this first post, I will talk about my clients who want to continue to both own their house (apartment or condo) during and after their divorce.  

You may wonder why my clients sometimes co-own a house after a divorce.  There are many reasons.  A common reason for co-ownership is when parents want to maintain the home for the benefit of children.  If you keep the house, then your children may continue in the same school, same sports teams and play with the same neighborhood friends  –  until there is an appropriate time for the children to transition to a new home.  Another example is if you think that the market would be better in the following year, you might want to co-own and wait until you get a better sale price.

Are you thinking about continuing to co-own your home with your spouse?  If so, this article will help you start to develop a plan. Specifically, I will discuss what happens when you both co-own the property and one of you moves to another residence.  If you want to learn about what to do when you both continue to live in the same home during and after the divorce, check out the next article:  Divorce & Your Home – Part 2: Living in the House Together.

Who will stay in the marital home?

The first question is: Who will continue to live in the marital home?   Often when clients first arrive at my office, they think that they want to be the one to continue to reside in the home.  Then after discussion, some realize that another home might better meet their needs.  Be open to different approaches.    Together you and your spouse will discuss the reasons that appear to affect this decision.  Is there a home office?  What about the getting the children to school and activities?  Are parents or other family members living nearby or in the home?  Are there other family, spiritual or community connections that might be important to consider?

If you are the one who will move out of the home, think about to where you want to move.  Start to look at possible new homes.  As you look around, you may get a better sense of what type of new home will make you comfortable.  If you are sharing parenting of children, think about how close you need to be to the children’s other home.

Also, you should both discuss reasonable ground rules.  For example, usually the person staying in the home changes the locks.  At first this might feel unfair to the other person who left the home and remains a co-owner.  However, discussions about privacy for both of you, in your respective homes, may provide a good perspective.  Think about other grounds rules?  What about renting the home?  Using it as a home office?  In mediation and collaborative law, you will focus on the needs of the spouse who moved out, as well as, the needs of the spouse who stays.

How will we pay our expenses?

Consider house related expenses will be paid.    You should discuss different categories of expenses.

The first category includes the usual on-going expenses.   Utilities, real estate taxes, insurance, heating, landscaping, condo fees, and minor repairs are some on-going expenses.  Often the person living in the home pays for most, if not all, of these expenses.  (Remember the spouse that moves out of the house may have many of the same expenses associated with their new home.)  Sometimes, however, other arrangements are made.  For example, if the on-going costs are too much for the one residing in the home, then you both might share some expenses.

The second category of home related expenses includes home improvements and major repairs.  For simplicity, major repairs may be identified by cost, such as exceeding $500.00 or $1,000.00 and would include expenses such as a new boiler or a new roof.  Home improvement expenses are those intended to increase the value of the home upon the sale of the home. This is also referred to as “costs to improve marketability”.  Often clients agree that if it isn’t an emergency, no one should make a major repair or an improvement unless the other spouse first agrees in writing. This reduces the problem of misunderstandings about financial matters.

What about taxes related to our home?

You need to think about the tax benefits associated with some payments.  Mortgage interest and real estate taxes may help either or both of you with your income taxes.  Discuss how to allocate these with your mediator/collaborative attorney and accountant.  Also, check with an accountant about whether you should consider creating an agreement in which you both can benefit from capital gains exclusion upon the sale of the home.

 How do we decide? 

As your divorce mediator or collaborative attorney, I will help you discuss this issue with your spouse.   Together you will make decisions that are best for you and your family.  Contact me here to schedule a meeting.