What Alternative Do You Have When You Can’t Sell The Marital Home?
Often the most valuable asset a couple has while divorcing, answering the question of who gets to live in the house and how the equity in the real estate is divided is just the first step. If finalizing the financial side of a marriage dissolution dwindles down to the question of how to manage things when the house cannot be sold there are some options depending on the reason the home is still in the balance.
One Spouse Demonstrates A Genuine Need For The House
A common reason for the house not being sold is the need for one spouse to continue residing there. This is often because the minor children of the marriage are best served by continuing to live in the home. One parent is typically given the use of the home while the children are still minors. Another possible reason that one spouse remains in the home is if that spouse has special needs the house was constructed or modified to meet.
Of course the needs of the children or one spouse does not obviate the right the other spouse has for compensation for his or her share of the home. Here are some ideas to solve that dilemma:
The spouse who remains in the home can pay a sum of money to the other spouse equivalent to the non-resident spouse’s interest in the house as determined by the court. If the marital estate has substantial assets the resident spouse may have cash to make this happen. Another option is to award the non-resident spouse more of the cash assets to equal his or her share in the equity of the house.
If cash is short in the marital estate the spouse residing in the home can investigate refinancing to liquidate some equity and pay off the other spouse’s share. The non-resident spouse can also wait until the spouse living in the house finally sells and get the money then, somewhat common when there are minor children. The decree will then award a lien for the non-resident spouse and may dictate a time for the sale, after the youngest child turns 18, for example.
On The Market But Not Selling
For some divorced couples the problem is a soft market or a big mortgage that is larger than the equity in the home. In the first instance the home just not sell, leaving the ex spouses with a potential but non liquid asset. In the second case the house is “underwater” and represents a liability rather than an asset in some ways. In these unfortunate cases there are some methods to finally resolve the problem:
Delay And Stay
As hard as it may be to delay closure, the parties may want to wait for a better time to sell. One, or in cases where the parties are amicable, both parties can determine to stay in the home until it sells or until the equity starts to move above water. If one party remains an agreement needs to be made about mortgage payments and upkeep, and if both remain a division of expenses will need to be negotiated.
Rent It Out
If neither party wants to stay in the home but it is not selling renting the house and dividing the net rent, after expenses, may work in the short term. Work with an experienced realtor to structure this arrangement.
Agree To Sell For Less Than Its Value
If you have equity in the property and the buyers looking at it are stalling because of price consider taking less than the asking price or the assessed value. Both parties may be out some cash but the home will be sold and everyone can move on. In cases where you have no equity because of the lower price you each may have to cover the difference out of other marital assets.
When you home is worth less than the mortgage you may want to agree to a short sale to finally finish the details even post decree. Your mortgage company must agree to such a sale and forgive the amount by which the sale is short. There may be damage to your credit but not as much as walking away from the home that will not sell.