Unfortunately, going through a divorce is both an emotionally and financially difficult experience, made more difficult by the division of a couple’s assets. Although this may be a streamlined process for some couples, others find it extremely difficult to split their property without seeking professional assistance.
There are many types of property that often need to be divided when a couple is going through a breakup. Therefore, it is first important to consider which types of property need to be split. This may include real property, investments, personal items, vehicles, retirement or superannuation funds and cash and/or bank accounts. However, this article will focus on the division of real property, which includes vacation homes and family residences.
How to divide property
If the property is owned by both parties, there are two options for couples to choose from when deciding how to best dispose of the asset. For example, couples can either:
- Sell the property and pay the costs of the sale and split the proceeds, and/or
- Have one spouse buy out the other spouse and become the sole owner of the property.
How to sell property during a divorce
Before making the decisions on these options, they should undergo three key steps:
- Determine the value of the property
- Establish whether the property can be sold at a price that will pay off the remaining mortgage
- Understand how the profit will be divided amongst the couple should the property be sold with a surplus, which is above the cost of paying off the mortgage
The final step often creates genuine issues, which can be difficult to resolve, as occasionally, one partner feels as though they are entitled to more than half of the proceeds from the sale of the real property. To help decipher how to divide the cash asset from the sale of the home, several factors should be considered. These include:
- The contributions of both parties to the relationship, including financial contributions, non-financial contributions and contributions to the welfare of the family; and
- The future needs of each party, e.g. the earning potential of each party, the income disparity of the parties.
Overall, it is always best if these decisions can be made by the couple themselves in an informal environment. Although the couple may find it necessary to put the agreement in writing to secure a financial agreement.
Further reading: The Power of Mediation in Property Division Post-Separation
If the couple is unable to form an agreement by themselves, the couple may opt to seek such orders from the Court for a judge to determine. Although couples should be aware that this option is costly and time-consuming, and thus, it is recommended that couples try to come to an informal or written financial agreement by themselves.
After a couple has decided on the proceeds from the sale of a jointly owned real property, they should put the property on the market. Within this, both parties must agree to make the property available for inspections to potential buyers. The couple should also move through the selling process in a cooperative manner. Once the sale has occurred, the assets from the sale of the property will be divided between the parties as agreed upon. From this, the parties can move forward.
Selling property during a divorce can be extremely difficult. Thus, good planning and getting professional assistance can make the process much easier for all involved.
