Should I sell a house fast after or during a divorce? This is a common question we receive from friends. Whether or not a former couple decides to sell a house depends on many factors, which we describe in detail below.
Part 1: Understanding How the Home Can Be Divided – 3 Methods
1. Sell a House, Split The Profit: Sell the home and both of you move out, with profits being divided between the two of you. The money in this case can either be used for each person to put towards a new home, or towards other expenses. When divorcing couples decide to sell a house, selling as-is is a popular option.
When selling the house “as-is”, there is no need to do repairs or use a traditional licensed agent, simplifying the selling process. Companies like Sovereign Home Buyers also close quickly, helping former couples to move on with other decisions with fewer negotiation and communication necessary.
2. Buy the Other Out: One person to buy the other out of the home. In this case, the person who wants to maintain ownership would pay the other for his/her half. Additionally, part or all of the value of the house can be transferred from one partner to the other as a part of the financial settlement of the divorce. The partner could keep a small stake in the home and receive a percentage when it is sold, or they can give up all ownership.
3. Hold on to the House: Divorcing couples can also choose to hold on to the house without changing who owns it. For example, in a situation involving family, you may choose to continue to live in the home until all the children move out.
Part 2: Breaking Up the Mortgage – Sell a House?
So, how do you know which of these options is right for you?
This depends entirely on those getting divorced. Here are some questions to ask yourself if you are questioning whether to sell your house to a home buyer, or utilizing another option:
- Income Requirements: What are the income requirements to keep rather than sell a house?
- Children’s Needs. If the couple has children, what option suits their needs best?
How to Sort Out the Mortgage
Many divorcing couples that have a mortgage together (joint mortgage) choose to sort out the mortgage so that only one partner has their name on it. This has two primary benefits:
- The person who stays in the house does not have to rely on their former partner for the mortgage.
- Secondly, the person removing their name from the mortgage will be able to borrow more for a new home without their name on the mortgage of the house the couple had together.
Part 3: Transferring Ownership of a House After Divorce
If divorcing couples decide it best to transfer ownership of a house, rather than sell a house traditionally or to a home investor, there are several considerations.
Most often, transferring ownership of a house utilizes a quitclaim deed. The spouse whose name is being removed from the title uses the deed to give up (“quit”) all rights (claims) to ownership. In exchange, the spouse who retains ownership of the house pays valuable consideration to the spouse filing the quitclaim. Valuable consideration could be either money, or item(s) with equal monetary value.
In order to proceed with transferring ownership via a quitclaim deed, utilize the following steps from homeguides.sfgate.com:
- Contact your county recorder’s office to request the following:
- Quitclaim deed form.
- Preliminary Change of Ownership form.
- Your home’s legal description.
- Fill out the quitclaim form. You’ll enter the amount of the valuable consideration; the legal description of the property; the city and county where the property is located; the date; and your signature, on the declarant’s line. You must sign the form in front of a notary public, who’ll verify your identity and fill out her part of the form to certify that she witnessed your signature.
- Decide how much the co-owner will pay for your share of the house. This is what we earlier referred to as the “valuable consideration”. The divorcing couple decides the ownership and value, and their arrangement must be described on the deed.
- The spouse staying in the house fills out the Preliminary Change of Ownership form.
- Bring the quitclaim and the Preliminary Change of Ownership forms to your county’s recorder of deeds.
Part 4: Negotiating a Buyout After Divorce
While the steps above seem simple, one of the most challenging aspects involved determining valuable consideration. If the couple disagrees on what each portion of ownership is worth, it is best to consult with not only their attorneys, but also a tax professional that can help the couple understand the challenges and benefits of their arrangement.
Obviously, there are many considerations when deciding whether or not to sell a house in divorce. For this reason, many people decide to utilize a company such as Sovereign Home Buyers for a quick, hassle free sale. This allows both parties to close quickly and receive cash promptly, so they can move forward.
If you have any questions regarding how we can help, or if you would like a free quote with NO obligation, call us.
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