When spouses decide to separate often their largest asset is the family residence and one of their hardest decisions is what to do with it. Will one spouse buy out the other spouse’s interest? Will it be sold to a third party? Will the sale be postponed until the children leave home? These are questions which all spouses need to resolve.
If the home is to be listed for sale the market will determine the value of the home. Often the spouses will get opinions regarding the appropriate listing price from three realtors and decide together which realtor they feel can do the best job for them. Sometimes they will each choose a realtor and the two realtors will co-list the home. If one spouse is buying out the other spouse’s interest the house needs to be valued.
The value of the family residence can be determined in several ways. The most current tax assessment can be a useful guide but will not always be accurate, especially if the home has been renovated or upgraded since it was inspected by the tax authority.
The value which will be used if the spouses are unable to agree and the matter proceeds to court is a value determined by a certified appraiser who has been retained jointly by the spouses.
If one spouse wishes to buy out the other spouse’s interest but they are unable to agree on the value of the family residence, it can be listed for sale and either spouse has the option of matching an offer made by a third party. If this is done it is important to have an exemption written into the listing agreement so that the real estate commission will not have to be paid if it is purchased by one of the spouses. Not all realtors will be willing to list a property with this exemption but they may list it if the spouses agree to cover their out of pocket expenses for advertising, etc.
If the spouses wish to postpone the sale of the house to allow the children to remain in it for a few years they can both remain on the title and divide the equity when the house is eventually sold. They will have to negotiate which spouse will live in the house and who will be responsible for expenses such as the mortgage payments, house insurance, property taxes and repair costs until the house is sold. A written agreement called a Separation Agreement should be prepared which sets out all of these details and which also sets out when the house will be sold.
