Several family law attorneys say they received more requests for information about divorce in January.
For couples whose relationship is on the rocks, Christmas is not a festive season. Rather, it is a time of tension that could spell the end of their union.
When divorce proceedings are initiated, the spouses must consider several issues, including the issue of the house, which is part of the family inheritance. Depending on your situation, you have several options available.
- Living together
- Sale of real estate
- salvation from the other
- Purchase of the house through mortgage assumption
Living together
Due to the current housing shortage, spouses may have to live together while one of them finds a place to live, which can take a long time if the budget is limited as they have to continue paying off the mortgage at the same time.
For those in difficult relationships, staying with your ex-partner is no fun, but is often the only option, even if the house is for sale. Since the real estate market is slow, it may take some time to find a buyer. Be patient to avoid making a fire sale.
Sale of real estate
If the married spouses decide to sell the house, the proceeds of the sale, less the mortgage balance and the selling costs, are divided into two parts, regardless of whether it is a profit or a loss. It is assumed that both parties contributed equally to the original deposit when making the purchase. Since the house is part of the family inheritance, everyone gets their share, regardless of their marital status.
Repayment from ex-spouse
If one spouse wants to keep the house, they can buy the other's share. To do this, he must bear the costs of the appraiser and the notary alone. As for the estimate of the part to be paid, it corresponds to the value of the house minus the remaining balance of the mortgage and, if applicable, minus the penalty for early repayment. The result of this calculation is divided by two, which is the value of each share. Numerical example:
- Value of the house: $400,000
- Mortgage balance: $250,000
- Early repayment penalty: $10,000
- Value of each share: $400,000 – $250,000 – $10,000 = $140,000 / 2 = $70,000
By paying $70,000 to his ex-spouse, he becomes the sole owner of the house.
Purchase through mortgage assumption
If one of the spouses wants to keep the house and the sale does not make a profit, it may be advantageous to proceed through a mortgage assumption. The advantage of this option is that the interested party only has to pay the notary fees to become the sole owner. To do this, he must qualify with the bank and prove that he has sufficient financial resources to take on the mortgage on his own.
However, the bank does not grant a mortgage exemption because this is the original mortgage between the spouses, which continues. The ex-spouse thus retains a connection to the house. Couples who want to end their relationship permanently will not be as open to this option.
Diploma
Divorce proceedings are tedious, complex, lengthy and often no fun. Although the process can be emotionally taxing and extend over a long period of time, it is a necessary step in ending a relationship that has reached its end. It is better to focus fully and be forgiving and fair. It's not an end in itself, life goes on afterwards.
Advice
- Protect your credit score: Make sure any shared debts are managed properly to protect your credit.
- Plan your future accommodation: It is advisable to start looking for a new home as early as possible to reduce the stress of moving.
- Consider the tax implications: Find out about the tax implications of selling property or purchasing shares from a former spouse during a divorce, especially if you own rental properties or second homes.