Any couple who finds themselves in the unfortunate position of separating or divorcing faces a multitude of difficulties, so taking the aggravation out of handling the sale of the mutual home can be a major factor in cutting out stress. Most ex-couples have enough to worry about already without that addition of even more legal and financial costs.
Why People Sell Their Property In A Separation or Divorce Situation
Before we dive into the steps you can take to minimize aggravation from real estate while dealing with divorce or separation, it’s worth taking a moment to cover why many couples end up selling.
For most couples, it comes down to personal reasons for selling, since the Globe & Mail reported that for most couples in Toronto a separation comes with big financial consequences.
Emotional Considerations When Selling Your Home When Dealing With Separation Or Divorce
Divorce is an emotional time regardless of the reasons for the separation. These emotions can play a big role in the decision to sell the home, especially if there are years of memories in the family home where children were raised. Maybe the couple has customized the home just how they like it and neither want to leave behind all of the efforts which went into those renovations.
These sentimental attachments can go either way. They may foster attachment and leave both ex-partners wanting to stay. Conversely, they can have both ex-partners wanting to move out as soon as possible to avoid bringing up old memories. Both partner’s preferences may not match up and lead to difficulties in deciding what to do with the property.
Deciding whether you want to stay or go takes a great deal of thought and requires some honest conversation. It isn’t a decision which should be undertaken lightly, and both parties should consider not only what they think in the present but also how their feelings may change in the future.
Living in the home you shared during your marriage may not be what you thought it would be after the divorce.
Financial Considerations When Selling Your Home After Divorce
When it comes to selling your home after divorce, one of the greatest financial considerations is not only who bought the house buy who will pay for it. Assuming you bought the house together with your ex-spouse it’s likely you were working together to make payments. When people buy a house together, they typically buy a house which requires both partners’ salaries to pay for it.
Since you are presumably losing half of the household income following the divorce, it’s not hard to see how paying the mortgage, property taxes, insurance, and the maintenance costs can become daunting, if not completely impossible. That’s not saying anything about the time and energy a homeowner must invest into maintaining and managing the house properly.
Stay or Separate For The Sale?
Staying together to sell is not always an option, particularly if the separation is not on the best terms. Remaining a married couple over the course of the home sale is too much stress for some to bear if they simply want to get the separation over with.
Of course getting your home sold in the right time frame for top dollar value can be made possible with the help of an experienced real estate agent. Starting with a home evaluation is a good place to start because it will help you determine how much you can expect to get for the home sale. Working with an experienced Realtor will help you navigate the best way to get the most money out of the sale of your property. It is very important that you proceed wisely since it is typically the largest asset for most and since you will be on one salary going forward there can be many factors eroding your bottom line.
Now that we’ve covered the general considerations you should be aware of when you are selling your property after or during a divorce or separation we can get into the steps of the home-selling process and how to handle them to minimize aggravation and maximize profit.
Step 1: Understand the Law
Regardless of the circumstances of your divorce or separation, whether amicable or not, understanding the divorce law is sure to leave everyone better off. As an Ontario Real Estate Team we will cover the Ontario Divorce Laws, but readers outside of the Province of Ontario should do their due diligence and research the local separation laws in their locale.
At the very least, understanding the laws will make the process of selling your home go more smoothly and save potential legal fees. At worst, it will give you an advantage when it comes time to get a lawyer involved if you have a basic understanding of where you stand in the eyes of the law.
Real Estate and Divorce Law in Ontario
In Ontario, both parties have an equal right to stay in the home during a divorce, at least until a separation agreement or other settlement is made.
One of the questions which divorce couples ask regarding their shared real estate is whether one can change the locks on the other. Under current Ontario law and the Family Law Act, the answer is no, unless there are special circumstances:
- If you have a court order which establishes exclusive possession of the matrimonial home pending a family trial, you can take exclusive ownership until the trial.
- The two parties have made a separation agreement which details which spouse has exclusive ownership.
In most cases, both spouses have equal rights to occupy the property until they reach a resolution about the possession of the home, it’s rarely easy for couples to continue living together following a separation.
However, the Globe & Mail reports that regardless of the difficulty posed by a cohabitation situation post divorce, some couples will, in fact, continue living together. They often end up occupying different parts of the house but continue to live together either not to relinquish something to the ex-partner or because they would otherwise be unable to afford to buy a house in Toronto.
In many cases, a great Toronto & GTA real estate agent who has the experience and market insights to provide truly personalized service can help one spouse find the house that’s right for them.
Step 2: Make Arrangements Before You Separate
The old adage that an ounce of prevention is worth a pound of cure rings true in the case of avoiding aggravation when selling your home after divorce.
There are a few measures one can take before separating or getting a divorce to reduce aggravation during the home sale. The most impactful is a prenuptial agreement which clearly outlines who will be entitled to what should the marriage dissolve. This type of agreement enables the homeowner(s) to go straight to choosing the best Toronto & GTA realtor for them.
When you are getting separated and don’t have a pre-existing agreement in place you can opt for a separation agreement. A separation agreement is a legally binding contract which details who gets what when it comes to different marital assets.
Step 3: Answer Important Questions When It’s Time to Sell Your Home During A Divorce
There are countless questions to answer regarding the home sale alone when you are separating, so having answers to the biggest ones ahead of time can save misunderstandings and conflict later on.
It is advisable to prepare for these decisions by consulting with your divorce attorney. Your divorce attorney will help you determine where you stand with regard to the law and how to handle the negotiations to keep your priorities in line. Be sure to consult your attorney before the final decision.
The home selling process is long and complex even with a good real estate agent. You can use our Toronto home seller’s checklist to keep yourself organized and maximize your chances of selling for a great price in the timeframe that works for you.
Decide Who Gets What
Determining how to split up the proceeds from the sale of your home after divorce or separation is a personal decision that has no right answer. The best way to avoid aggravation is to prepare by reaching a separation agreement which details how the real estate will be divided. Hire a lawyer if you want legal guidance or assistance determining what you are due.
Couples who aren’t on the best terms can benefit from getting a mediator to help them with communications and drafting the document. A mediator can be a friend or family member but there are professional options available as well. Knowing when to get a mediator is a personal decision.
If you need to know how much potential profit you’re looking at from selling your home post divorce you can get a free home evaluation to find out what your home in Toronto is worth.
Will Someone Continue Living In The Home?
Separated couples who live in large cities like Toronto may have a difficult time relocating after the separation. With many couples depending on the combined household income to pay the mortgage and maintenance cost, some decide to continue cohabitating instead of downsizing their living situation.
Deciding who claims which room is a prudent course of action for couples cohabitating after separation. In cases where one person stays in the home and the other leaves it’s important to outline specific details of ownership in the separation agreement.
Does The House Need Work Before It Is Put On The Market?
Getting top dollar value for your home sale is important regardless of whether you are separated. Making improvements, renovations, updates, or simply preparing your home for sale often takes an investment.
Who will handle the bill? Who will decide which changes to make and decide how they will be carried out? Your real estate agent may be able to guide you when it comes to renovations and the best way to carry them out, but the decisions will be up to you and your ex-spouse.
Which Party Will Be Responsible For The Sale of The Home?
You may find that for purposes of convenience it might be helpful to outline each person’s responsibilities, even if they are shared equally. The arrangement you reach really depends on your personal circumstances.
Couples who are parting amicably may trust all responsibility to one of the partners while others aren’t comfortable unless they are a part of every decision and interaction. If you are concerned with your involvement you can consult your lawyer or outline your demands in the separation agreement.
Step 4: Choosing A Real Estate Agent
Choosing a real estate agent to sell your home after divorce is an important consideration regardless of the agreement you reach. A good real estate agent is more likely to get you top dollar value for the home and leave more profit to divide regardless of the reason for the sale.
Working with a real estate agent also offers the added advantage of having an impartial 3rd party working on your behalf. That way any personal tensions between you and your soon-to-be ex spouse will stay personal and not interfere with business.
All Ontario real estate agents are required to do what is in their clients’ best interest as part of their Code of Ethics. This legal requirement is taken seriously and enforced by the Real Estate Council of Ontario (R.E.C.O.). This requirement is consistent throughout most jurisdictions so you can stay at ease knowing your real estate transaction is being handled by an impartial party.
An experienced real estate agent can also take the stress out of selling because an agent handles all aspects of the sales process. Everything from evaluating the value of the home to considering offers and providing guidance, a good Toronto & GTA real estate agent will take on a great deal of additional work and stress which can come with selling a home. You can trust your agent’s advice and concentrate on the demands of your separation.
When it comes time to make a joint decision about the home sale with your spouse, your real estate agent can also serve as an impartial mediator who takes the personal issues out of what is fundamentally a business decision. You and your ex-spouse might have different ideas about selling and an agent can ground your discussion in experience and market insights.
If you are considering selling your home in Toronto & The GTA Frank Leo & Associates are available to answer your real estate questions. You can contact us or take advantage of our free home evaluation at any time. We’ve been serving the Toronto & GTA real estate market for over 3 decades and have helped 1,000’s of people buy and sell homes in the region.
Step 5: Agreeing To A Selling Price
Once you’ve settled on the details, reached an agreement about who will handle the real estate sale, and have a real estate agent advertising your home you can start the negotiations about accepting offers.
If your real estate agent has evaluated your home’s value accurately you most likely already have an idea of how much you will get for your home. The difficulty may arrive when you must work together with the ex-spouse to settle on a selling price.
Most separated couples face the dilemma of wanting to sell quickly to minimize interaction without taking a loss for the property. You may find yourself in a situation where one person wants to accept a price and the other wants to hold out.
The additional financial stress of a divorce or separation can add additional pressure on those who may be depending on the money from the home sale to sustain the cost of the divorce.
So how do separated couples overcome these challenges and agree on a selling price that makes everyone happy? Working with your real estate agent is a good place to start.
An experienced realtor will be able to help you sell your property for a higher price and leave everyone satisfied with the result. Frank Leo & Associates, for example, have helped sell real estate in Toronto for over $1 million over the asking price.
Evaluating & Negotiation The Offer On Your Home
Home buyers who are prepared to buy your home will make a written offer to purchase the home via your real estate agent. At this point your real estate agent will review the offer with you and walk you through the contract in order to decide whether to take it.
If the price meets your asking price or there are competing offers which push the price above asking price, everyone will be happy. It’s typically when the offers don’t meet your minimum requirements that difficulties begin.
Regardless what starts the disagreement about accepting & negotiating an offer, there are a few ways to overcome the challenge. The first and most simple option is to lean on your real estate agent as the voice of reason. Your real estate agent’s recommendation may be enough to get your spouse to accept the buyer’s offer.
Passing on the offer in hopes of getting a better one or investing in improvements to boost appeal are also both viable options, within reason. The divorce or separation might make these options less appealing but they can work out in some cases.
The hardest situation to overcome is when an ex-spouse is unreasonably selective about accepting offers or negotiating the price. If difficulties persist and you or your agent suspect they might jeopardize the sale of your home it may be worth considering a professional mediator or legal assistance.
Step 6: Splitting The Profit From The Home Sale
If you’ve already reached a separation agreement the matter of splitting the profit from a house you’ve sold during divorce will all be prearranged. Deciding how to divide the profit well before you sell your home is the best course of action to avoid aggravation. It may also help you maximize income from your home sale by allowing everyone involved in the home sale to concentrate on selling the home.
Important Final Word Of Wisdom
Of course, in reality, most couples who sell a home after or during a divorce or separation will not have a predetermined plan in place. Reaching an agreement among themselves is the option which leaves the most money in the pockets of both parties. It can be very difficult emotionally during this stressful time. It is important that all parties understand how the law works but it is typically divided equally. If the couple is having disagreements it is wise that they agree to get the property sold for the most money amicably and have the funds held in trust until they can agree as to how they should be divided. The reason for this suggestion is that it will avoid the potential for losing many thousands fighting while bills mount. If there is a disagreement as to who will pay the taxes, mortgage, repairs and any other costs associated with the property? This will lead to overdue payments, interest and penalty charges and even may affect your credit rating. These consequences can avoided by agreeing to do everthing to get the property sold asap and have more money held in trust for you once you decide on how it should be divided. When this isn’t possible it may be necessary to get lawyers involved. Just be aware that the amount you will be left with could be substantially less.
Each partner’s financial situation and the details of the divorce may play a role in how much equity they are awarded. One thing which is certain is that the cost of settling in court will eat into the profit from the sale of the home quite quickly.