Considering a divorce? Already involved in a divorce? Know anyone involved in or considering a divorce? Does the divorcing couple own a home or other real estate? If so, read on to learn about divorcing the house as well as the spouse.
In Georgia, the overwhelming majority of divorcing couples try to “settle” the division of property before going before the judge. Usually neither has an attorney, although they may have used the services of a mediator or “collaborative practitioner” to arrive at their agreement. The property agreement is ratified by the judge who has no choice but to believe that each of the parties know and understand what they have agreed to. In fact, the judge’s primary concern centers on any children involved in the divorce. Real estate and other property assets take a distant back seat to the welfare of children, and rightly so.
Often the family home becomes important in figuring out what’s best for the children. Will the children have a place to live? Will they be able to continue at the same schools and be near their friends? “Keeping the family home” is seen as important in minimizing disruption to the children’s lives. So one spouse often becomes the “in-spouse” remaining in the family home with the children and the other becomes the “out-spouse” (not to be confused with “outhouse”).
How do the in-spouse and the out-spouse decide who will make the monthly payments and pay the insurance and taxes on the family home? How do they decide who would “get” the home?
The family home is often the most valuable financial asset in the marriage. Sadly, very little “due diligence” is done by either the in-spouse or the out-spouse to make sure that the family home is accurately and completely dealt with in the divorce decree. Pretty much all that is ever done is to get an appraisal (or two) and subtract the amount of the mortgage owed to come up with the “equity”. Equity becomes a financial asset to be divided between the spouses. The in-spouse often gives up claim to other financial assets, such as pensions or investments, in exchange for the perceived equity of the family home.
Here’s a revelation: DIVORCE INCLUDING REAL ESTATE IS A REAL ESTATE TRANSACTION. There is a “buyer” (the spouse agreeing to take financial responsibility for the house) and a “seller” (the spouse being released from any financial responsibility for the house). THIS IS A HIGHLY EMOTIONAL REAL ESTATE TRANSACTION IN WHICH NEITHER PARTY HAS ANY REAL ESTATE REPRESENTATION WHATSOEVER. In fact, this is a real estate transaction in which neither party even has any legal representation, since most divorces are done without either party hiring an attorney.
The buyer-spouse (usually, but not always the in-spouse) is purchasing real estate without performing even the minimum Due Diligence any prudent buyer would perform. Before agreeing to “take” the house, did the buyer-spouse conduct a title search? Check for liens against the property? Hire a home inspector? Have a termite inspection done? Get mortgage counseling to determine the exact ramifications of becoming the sole owner of the home? Did the seller-spouse (usually, but not always the out-spouse) get mortgage counseling to learn the exact ramifications of signing that Quit Claim Deed?
To be continued in Part 2…