Many people going through a divorce want to get as far away from the other party as possible, which can lead to unwise decisions that end up costing them money. Prematurely paying off shared credit cards, selling personal property, and purchasing or selling real estate are only a few examples of actions that should be avoided until the final settlement.

Purchasing a new house is a popular initial step in the process of healing from a divorce. They desire to leave the matrimonial home and strike out on their own, make a fresh start and cement their independence. What better way for them to represent their new circumstances than to build an oasis in the form of a new home?

This is a frequently asked question. Is it possible to buy a new house before the separation is finalized? Usually, but it must be done with extreme caution. Legal counsel must be retained by the purchasing party to sketch out the path and prepare the relevant documentation. The gleaming new home could end up in the pot of marital property if the necessary legal process is not followed.

A family lawyer or mediator should be hired to discuss and create a legally binding agreement between the parties. To allow a spouse to purchase a new house that is not subject to the marital property distribution process, the agreement must include the following provisions:

1. The agreement must be in writing, signed by both parties.
2. Include language pertaining to the title and equity.
3. Be signed only when both parties’ financial information has been fully disclosed.

If these conditions are not met, the contract may be ruled void. The home, or the rise in the value of the new home, could be designated marital property and subject to partition as a result. To demonstrate clear ownership, the matter of new home furnishings must also be addressed.

Consider a worst-case scenario. A generous family wants to assist a divorcing relative start over, so they give them money to buy a new home. They didn’t intend for the property to benefit both parties, so they double-checked that the title was only in one name. The title may be irrelevant, the home may be ruled to be marital property, and a court-ordered sale may be required. The proceeds would then be distributed equally, and a seemingly generous proposition has gone horribly wrong.

What should you not do during separation?

Due to financial constraints, I had to sell my matrimonial home and purchase a less expensive home shortly after my divorce. I engaged a local realtor with both the sale and purchase of my property. She performed an excellent job. I was able to close on my new home the same day that I closed on my old one since I sold swiftly. (One would think) a resounding success!

After talking with others about my transactions, I realized that my agent never went the “additional mile” to ensure that I understood all elements of my transactions and that the sale and purchase were completed appropriately. I discovered that various corners were cut that may have resulted in a disaster!

This is precisely why I decided to obtain my real estate licence so that I could assist singles and first-time homebuyers with their purchases without cutting shortcuts!

Realtors enjoy selling houses, so it was exciting to get a call about one of my listings from someone who was really interested and wanted to see it right away. He wasn’t dealing with a lender, so I recommended one, and during that conversation, he divulged to the lender that he was going through an unfinished divorce.

This was an immediate red flag, as would family law consider a residence purchased before the separation agreement is finalized to be marital property. He didn’t have access to a family lawyer, so he was fully uninformed of the circumstance and the difficulties it would entail.

When going through a divorce, people must make numerous decisions. Whether you’re going through a divorce yourself or are assisting a client or friend through the process, it’s critical to take a step back and think about the long-term implications of major decisions, especially those that have significant financial and emotional ramifications, such as what to do with the matrimonial home.

Should I keep or sell my matrimonial home?

Clients in my consulting practice frequently inquire about what to do with the matrimonial house. What will they do with it? Will they keep it or sell it?

The family house is a particularly challenging consideration. There are emotional attachments, happy recollections, and feelings of security for many. And the rest of the world assumes that after a divorce, the winner gets the house and the loser has to go. The truth is that we all know that there should be no winner or loser in a divorce since wise divorce means avoiding a battle. However, while the home holds so much emotional value, it may not be the best financial asset.

Here are some questions you should ask to assist you to make a decision:

• Will your post-divorce income be enough to support your living expenses?
• What is the balance of your mortgage?
• I’m not sure why I’m retaining it.
• Is there too much or not enough space?
• What are the costs of selling and buying if I decide to relocate?

When building your post-divorce financial plan, keep these aspects in mind, as well as any other matters that are essential to you, and consult with the appropriate authorities.

Here are five things you (or your clients/friends) should examine before making a final decision on your house to help you see through the fog and avoid frequent pitfalls:

• What are the tax implications if you or your former partner buys the house outright?
• What are the potential problems if one party stays in the house and is liable for the mortgage payment?
• How much does it cost to maintain the house on an annual basis? Have you had a recent inspection, and if yes, are you aware of all issues?
• Should you keep the house and buy out your soon-to-be ex-spouse, or should you buy out your soon-to-be ex-spouse and keep the house?
• Is it realistic for either of you to keep the house after the divorce?
• By answering these questions, you can avoid problems with the division of your home, which is likely your most valuable asset.

Reader’s Question

I divorced in 1994, and as part of the settlement, I kept the house. Even though I refinanced the mortgage in my name, I still see my ex-name spouse’s on the tax assessment form. What does having his name on a paper entail, especially when I’m trying to sell it? What is the most cost-effective (in terms of both money and time) way to have his name removed and replaced with simply my name? What is the procedure that I must follow?

If the house is in your name only, the tax assessor’s information will normally have no bearing on your ability to sell it. Your name is on the title to the house, and it will stay that way. However, the information held by a government agency may differ from the names on a home’s title, which happens regularly.

The document that transfers title from a seller to a buyer may not modify the information on the local assessor or real estate tax office in some localities. Most governments, we’d like to believe, would streamline the procedure and give a way to update ownership information while also changing the name and address information on other documents related to the home.

Regrettably, not all government agencies coordinate the transfer of data when a property is sold.

To find out what you need to do to modify the name on the form, call the tax assessment office. If your real estate tax assessment agency has an online portal and allows changes to be made online, you may be able to complete the name change online. Otherwise, you may have to change the name on the account by going in person and filling out a form.

We hope that’s everything you need to know. You mentioned that you’ve refinanced before, which leads us to conclude that your ex is no longer on the property’s title. Nonetheless, we must inquire as to whether or not your ex was required to sign documents in any of your refinances since the divorce. We sincerely hope not. But if that’s the case, it means you may have kept the house as part of the divorce settlement, but the paperwork to put it in your name and your name alone may not have been completed.

If your ex’s name and your name are both on the assessor’s account, it’s possible that the assessor’s office saw your name before and after the divorce and forgot to remove your ex’s name at the time of the divorce.

To update the name on the account, contact your local tax assessor’s office or search it up online.

Conclusion

It is possible to purchase a home when legally married but separated from your former spouse, but there are some additional requirements and considerations. Your legal separation agreement will be required by your lender first. They’ll also require a copy of your property settlement agreement if you have one.