Going through a divorce is a difficult experience both emotionally and financially. Unfortunately, the one thing that cannot be avoided during a period such as this, is the division of a couple’s assets. While some couples can move smoothly through this process, many cannot manage to divide their property without some form of assistance.
First it is important to focus on the type of property the couple is dividing. There are several types of property that often need to be divided when a marriage or a partnership is dissolving. The types of property include;
- Real property, such as the family home or a vacation house
- Retirement or superannuation funds
- Investments
- Cash and/or bank accounts
- Personal items
- Vehicles
For this article, we will be focusing on the division of real property which includes family residences and/or vacation homes. If the couple owns the property jointly there are a few possible options for deciding how to best dispose of the asset. A couple can opt to either;
- Sell the property outright and split the cost of the sale and the resulting profits
- One partner/spouse can offer to by the other partner/spouses share of the property and become the sole owner of the property
- Agree to remain joint owners of the property and rent the property, thereby using the rental monies to pay the mortgage and other ensuing costs. In this case if the couple rents the property for more than the cost of maintaining the property, the surplus can be split between the two in accordance with a written agreement
Many couples opt for selling the property outright as neither can afford to buy the other out or neither is interested in remaining in a home that holds significant memories, both good and bad. It is rare that a couple will remain joint owners and rent the property, so the most likely solution to dividing an asset of real property is to sell it.
To sell a piece of real property it is important for the divorcing couple to take the following steps;
- Ascertain the actual value of the property
- Determine if the property can be sold at a price that will pay off the remaining mortgage
- If the property can be sold with a surplus that is above the cost of paying off the mortgage, determine how the profit will be divided amongst the two owners.
The third step can be the one area where genuine issues can arise that create difficulty in resolving. Sometimes one partner feels they are entitled to more than one half of the proceeds from the sale of the family residence. It is at this juncture that several factors will be considered when deciding how to divide the cash asset from the sale of the home. Some of these factors include;
- The financial contributions of both parties to the original purchase of the home
- Did the home belong to one party prior to the marriage
- What were the non-monetary contributions of either party
- The future needs of each party
- The earning potential of each party
- Outstanding debts from the marriage that might require profits from the sale of the home for final payoff
It is always best if these decisions can be made by an informal agreement by the couple themselves. However, it is also possible that the couple will feel they need the agreement to be put into writing to secure their financial agreement. If the couple cannot come to an informal or written financial agreement on their own, then the next option is to seek a consent order from the court. The couple can submit the areas of agreement and their areas of disagreement to the court for input and determination by a judge. However, this option is costly and takes time. Therefore, it is always best if the couple can come to an informal agreement or a written financial agreement, on their own.
Once a decision has been made as to how the proceeds from the sale of jointly owned real property has been determined, it is time to put the property on the market. Both parties must agree to make the property available for viewing to potential buyers and move through the selling process, cooperatively. When a sale is finally made, the assets from the sale of the property will be divided in accordance with the previously agreed upon plan and the couple can move forward.
While divorcing and selling property is difficult, good planning and getting assistance from professionals who deal in the regular course of selling real property and dividing assets, can make the process much easier.
If you find yourself in need of assistance with this, or any other legal issue, please contact the law offices of Owen Hodge Lawyers. At Owen Hodge, we are always happy to assist clients in understanding the full ramifications of any and all of your legal needs. Please feel free to call us at your earliest convenience to schedule a consultation at 1800 770 780.