If you’re going through a divorce, what happens to the marital home can be a major concern. Separating from your partner is stressful enough, without the added burden of knowing what to do about separation of property. There are several of options available to divorcing couples, from selling immediately to transferring ownership to one party. The right approach will depend on your circumstances.
The three most common ways of handling the transfer of property after divorce:
- Sell and split the proceeds
- One party keeps the home
- Maintain joint ownership
Read on to look more closely these options.
Option 1: Sell the property and divide the proceeds
Without doubt, the cleanest way to divide the home’s equity is to sell the house. However, many people are emotionally attached to their homes, so make sure you both agree to this before trying to sell the home. Once the mortgage is paid out and any outstanding owed monies are paid, the remaining money is split evenly between the parties – dependent on any legal requirements. This is the easiest way to separate from each other’s lives.
Option 2: One party keeps the house
In this situation one party assumes sole ownership by refinancing the mortgage. Refinancing serves three purposes, it:
- Removes the other party from the mortgage
- Pays off the outstanding debt, replacing the old mortgage with a new loan
- Frees up money to buy out the other party’s share in the property
When refinancing, the now-divorced owner will need to qualify for the mortgage based on their sole income. Sometimes it’s unrealistic to expect one party to afford the home, meaning the person who keeps the home must buy out the other’s share of equity. We recommend you decide who gets to keep the home first, either through discussion, mediation, or your legal representatives, to avoid a lengthy and expensive argument over the property.
Option 3: Maintain joint ownership
If the property market is in a slump, it might not be the right time to selling the home, especially if it means selling the property at a loss. If you both owe more than the house is worth or can’t afford separate homes, a short-term solution can be sharing the house. If it’s agreeable to continue living together, sharing the ongoing costs – fantastic. It might be easier for one party moves out but continue paying the mortgage costs until you find a permanent resolution.
Children are the most common reason a couple choose joint ownership after divorce. The secret to a successful outcome is to keep all options regarding the house open from the beginning.
Choose C&R Settlements to help with your separation transfer
As West Australian settlement agents and property law specialists, C&R Settlements help separating couples across our state navigate the complex legal requirements of separation transfers. Our team of settlement agents possess extensive property law knowledge, and will help deliver a worry-free divorce transfer, potentially saving you thousands of dollars in stamp duty and other fees.
Call our experienced team today and let us guide you through this often-stressful process. We’ll step you through the Change of Title and ensure your property settlement is smooth and trouble-free.