Overall divorce rates have been trending down over the last couple of decades. A notable exception is the over 50-year-old demographic whose divorce rate has more than doubled.
There are multiple theories on why this phenomenon has occurred. Many of the older divorcing couples got married at a young age and powered through an unsatisfactory marriage until the children left the family home. Some just realized that although a bit older, they are relatively healthy and believe they can again find happiness with another partner.
Whatever the cause, the reality is that this divorcing demographic has disproportionate financial assets compared to the younger generations. Greater assets combined with generally longer marriages often cause expensive and aggressively contested divorces.
Real estate holdings are one of, if not the single largest asset class contested in the divorce. In addition to the “Family Home”, holdings often include multiple 2nd homes or single-family investment homes. In more affluent families, commercial properties and businesses may also be in the real estate investment mix.
The first step regarding real estate properties held by divorcing couples, will be an appraisal of the properties. However, more important than just the value of the properties is the equity, (value of the home minus the mortgage), minus necessary repairs to sell and closing costs. So, the next step would be hiring inspectors to really determine the if there are expensive maintenance items that may be required to be repaired or cause concessions with the eventual buyer. Also, upfront title and lien searches are highly recommended and can identify unwanted surprises like tax liens, mechanic liens or forgotten Home Equity Line of Credit (HELOC) lines.
If properties are sold during the divorce, the expenses are typically divided equally. Careful consideration should be taken by a party thinking about retaining the “family home” or any other properties because they would solely bare the additional expenses contractually required for repairs and closing costs.
It is crucial, early in the process, to consult a real estate agent specifically trained and experienced in working with divorcing couples and advanced negotiation techniques. This agent should work with a team to provide support in appraisals, property inspections, title research, insurance, and financing to ensure information is provided to help divorcing couples make informed decisions.
