The intent of divorce in Washington is to cooperatively divide and distribute all assets and debts acquired during the marriage. This allocation of community property is vital and necessary. Separating cash may be easy. Allowing each party to keep one-half the kitchen wares may be simple. How do parties divide and entire house as part of their divorce?
There are generally two main ways to deal with real property as part of a divorce.
Listing the house for sale tends to be easiest way to deal with real estate. As part of any divorce, the parties will create a full spreadsheet detailing all the available assets and debts. Attorneys then use these spreadsheets to manipulate the items to find a fair and equitable (typically 50-50) split of the assets and debts. The nice thing about selling a home is that the value is automatically determined by the sale price of the property, which means splitting the net equity of the home makes for easy work.
The hardest part of selling a real property during a divorce is agreeing to all the terms of the listing. Here are a few of the questions parties may get stuck on:
- Who is going to be the realtor?
- Who will live in the home pending sale?
- Who will pay the expenses of the home pending sale?
- Will the parties pay for upgrades or maintenance to the home? How will that construction be paid for during the listing?
- What will happen to the funds immediately after closing?
Generally, family law attorneys will craft a CR2A agreement to create a binding contract for the partis outlining all the potential issues. That way, there are little to no disagreements and the home can be sold quickly and efficiently.
If one party would like to keep the home, the parties will need to work cooperatively to make it happen. Maintaining the home without sale typically requires a Quit Claim Deed and Real Estate Excise Tax Affidavit to be executed. That’s the easy party. The more difficult parts are:
- Agreeing on the fair market value of the property; and
- Finalizing a refinance to remove the second party from the mortgage.
The “buyer” of the property wants the value as low as possible because that way they must pay the “seller” less money to even out the assets and debts. The “seller” obviously wants the most bang for their buck. Agreeing on the value often requires an appraisal though sometimes parties can agree without utilizing a third party.
Refinancing the property is one key aspect that is often forgotten by the parties during the divorce. Even if no cash out is required to equalizing the parties’ allocation of community property, a refinance is required to remove the “seller” from the liability. On rare occasions, the vacating spouse will allow their name to remain on the mortgage, but this is never recommended. This step generally requires working early and often with a mortgage specialist to work out details for the refinance.
If you anticipate divorcing with real property in Washington, speaking with a dedicated family law attorney will provide you the guidance and confidence you need. The legal team at the law offices of Magnuson Lowell PS are available to answer your questions and provide you effective counsel. Call today for a free case evaluation.