Selling your home during a divorce can be one of the most challenging and emotional real estate transactions! P.S. Not only for you, but for your realtor too!!
Recently, I finalized a divorce sale on behalf of some clients. It was a long, long road to get to the end. see divorce sales make the same mistakes over and over; I’ve been there, too so I wish I had known then what I know now.
Navigating the sale of a home during a divorce can be emotionally challenging and legally complex. As someone who has managed several of these transactions, both professionally and personally, I understand the unique difficulties involved. It's crucial to approach this process with empathy, practicality, and a clear understanding of the legal framework that governs these situations.
In my experience, divorces often fall into two broad categories. The first type involves relatively amicable separations. While emotions are still high, the parties can communicate civilly and make necessary decisions regarding the sale of the home without major conflict. On the other hand, contentious divorces can be much more challenging. This might involve one party being unable to access the property due to legal restrictions like restraining orders, which adds significant complexity to the sales process.
In divorce proceedings, a crucial initial step is drafting a separation agreement. This agreement, mandated by family law in Ontario, outlines the division of assets and other important matters. It can be negotiated directly, with legal counsel, or through mediation. A court order becomes necessary when the parties cannot reach an agreement independently.
Aside from property sales, separation agreements address a range of issues including spousal and child support, custody arrangements, and the division of additional assets. It's important to note that the absence of a separation agreement can delay access to the funds from a home sale, potentially affecting future property purchases and financial planning, particularly when seeking mortgage approval.
To facilitate a smoother home sale during a divorce, here are a few essential tips and things to avoid:
Non-contentious divorces
Both parties may still have different objectives and timelines regarding the sale. For instance, agreeing to sell the house is one thing, but setting a price and determining how quickly the funds should be released can be points sticking points. In my personal experience, my ex-spouse wanted an extremely quick closing, which wasn't feasible for practical reasons. Here are some tips to manage such situations effectively:
• Be on Team: “Get 123 Main St. Sold” Often each party has their own agenda. To avoid favoritism and be focused be on this team.
• Set Clear Goals Together: Meet with your realtor as a team to establish a listing price and strategy that align with both parties' interests.
• Agree on Pricing Strategies: If there's disagreement on the listing price, consider a schedule for price reductions over time to ensure realistic expectations.
• Establish Communication Guidelines: Decide on a fair communication plan where both parties are kept equally informed throughout the process.
• Prepare for Closing: Plan ahead for clearing the house for closing, including arrangements for items left behind to avoid last-minute stress.
• Communication is Key: Maintain open and clear communication with your ex-partner and legal representatives throughout the process.
• Be Realistic About Your Timeline: Understand that selling a home in this context may take longer than a standard transaction due to legal requirements and emotional factors.
• Consult with Legal Experts: Seek advice from experienced family law professionals to ensure you understand your rights and obligations.
Avoid:
1. Letting emotions dictate decisions.
2. Hiding financial information.
3. Ignoring the importance of a separation agreement for financial security.
Contentious divorces including situations where there may be a restraining order:
If the divorce is contentious, additional challenges arise due to potential legal constraints and strained communication between parties. In these cases:
• Separate Meetings May Be Necessary: Your realtor might need to meet individually with each party based on court orders or other legal requirements.
• Consult with Family Law Lawyers: Engage with respective family law lawyers to ensure compliance with legal guidelines and regulations. Understand that they are not bound by the same service levels and timelines that we as realtors need. You may need to facilitate the initial introduction and conversation with your realtor. Your realtor is bound to follow the rules, and can’t do their job unless this step is taken
• Incorporate Legal Directions in the Agreement: consider adding expectations and outcomes in the listing agreement to avoid misinterpretations. For example a schedule for list price, price reductions and terms and conditions acceptable by both parties
• Did you know if one party is being seen to hamper the sale, a court can remove them from the decision making even if they are on title? Don’t be that person!
If one party is still living in the house, likely the burden of care of them will fall on their shoulders, so cleaning up for showings, making sure the house is clean at closing, and disposing of the items neither party wants may fall in their lap, which seems unfair so I think this needs to be discussed at the beginning so everybody feelings are out in the open.
And here are the 𝟯 𝙢𝙤𝙨𝙩 𝙘𝙤𝙢𝙢𝙤𝙣 𝙢𝙞𝙨𝙩𝙖𝙠𝙚𝙨 I believe most people make:
𝟭. 𝗗𝗶𝘀𝗮𝗴𝗿𝗲𝗲𝗶𝗻𝗴 𝘄𝗶𝘁𝗵 𝘁𝗵𝗲 𝗹𝗮𝘄 - family law sets out the division of assets. While you might disagree with it or feel it’s unfair (many people do) it’s going to cost you more money in the long run to fight what you can’t change.
𝟮. 𝗡𝗼𝘁 𝘀𝗲𝘁𝘁𝗶𝗻𝗴 𝗴𝗿𝗼𝘂𝗻𝗱 𝗿𝘂𝗹𝗲𝘀 – or setting them and not honoring them. My experience with a divorce sale is that both sides usually have different goals. It’s usually around how much money they are ‘owed’ and how quickly they want the money ‘now’. Work with your realtor to set out the ground rules & 𝘱𝘶𝘵 𝘵𝘩𝘪𝘴 𝘪𝘯 𝘸𝘳𝘪𝘵𝘪𝘯𝘨 in your listing contract. Around this, the other thing I’ve found common is that one party will say yes to everything to appear agreeable – but then not honor the agreements to try and control the narrative.
3. 𝗡𝗼𝘁 𝗯𝗲𝗶𝗻𝗴 𝗼𝗻 “𝗧𝗲𝗮𝗺 𝗚𝗲𝘁 𝗠𝘆 𝗛𝗼𝘂𝘀𝗲 𝗦𝗼𝗹𝗱”. I find a lot of people in a divorce are on a team. Common teams are “Screw the other side Over”, “I want this sold Tomorrow” or “I don’t care what the law says. It’s all Mine Mine Mine” 𝘊𝘩𝘰𝘰𝘴𝘦 𝘵𝘩𝘦 𝘳𝘪𝘨𝘩𝘵 𝘵𝘦𝘢𝘮 - “Team Get My House Sold” and play to win.
I’ve done 3 short videos that summarize my thoughts on divorce, you can watch them here:
https://www.youtube.com/playlist?list=PLK3OzATTQDzmXxZI_jt91BzMqppKMlUD7
