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When love fades but real estate remains, things can get... complicated. Whether it is a Westchester colonial, a brownstone on the Upper East Side, or a condo with floor-to-ceiling windows and great light and not-so-great memories, figuring out real estate in a divorce requires more than just a quick online Zillow search.
Here are informative and necessary tips to keep in mind when real estate and divorce collide:
1. Your Home Has Two Values: Market and Emotional
Your house may be your sanctuary or the place of your last argument over the bedroom temperature. Either way, when it is time to divorce, the emotional attachment has to make room for financial reality. A neutral appraisal will help determine fair market value. However, what you think your house is worth might not match what the market says. I spoke with Whitney Bagliebter, Licensed Real Estate Salesperson for Compass, who said, “In divorce, a home often carries the weight of memories, both beautiful and painful. My role is to help a client separate sentiment from strategy.”
2. Title Isn’t Everything in New York
Just because your name is on the deed does not mean you automatically “own” the house in a divorce. New York is an equitable distribution state, which means the court looks at who acquired the property, when, how it was paid for, and whether it’s marital or separate property.
3. To Sell or Not to Sell? That Is the Question
Sometimes, selling is the easiest thing to do, as you can divide the proceeds and move on. Other times, one person keeps the home. That means refinancing, buying out the other’s interest, or agreeing to sell later (when kids graduate high school or college or the real estate market improves). There are pros and cons, as well as tax implications. This is why it is important to consult with the appropriate professional. Bagliebter feels strongly that a lot of thought needs to go into making decisions surrounding the hous,e as she added, “deciding whether to sell or keep the home isn’t just a financial decision, it’s a lifestyle one. It’s important to ask yourself if you can afford the home on your own long term?”
4. Don’t Forget the Mortgage
If both names are on the mortgage and one person stays in the home, the other person is still legally on the hook unless there is a refinance or an agreement indicating otherwise. Never assume your divorce agreement magically makes a bank change its terms.
5. The House Isn’t Just a Building — It’s a Budget
Owning a home comes with financial headaches such as taxes, maintenance, insurance, landscaping costs, and routine upkeep. If you cannot afford it and will not have the cash flow to keep it, the dream of keeping the house might quickly turn into a financial nightmare if you hold firm to this position. Be realistic and not romantic or sentimental when it comes to thinking about the house.
Bonus Tip: Work With a Divorce-Savvy Real Estate Agent and Financial Professional
Not all real estate agents are created equal. Find one who truly understands and appreciates the emotional, financial, and legal complexities of real estate during a divorce. Find a financial advisor or financial professional who can properly advise you with respect to the costs of keeping the home and the cash flow necessary. Informed and educated decisions are often the best ones.
Bagliebter had this bonus tip to add, “Divorce is already an overwhelming process; navigating real estate shouldn’t add to the stress. It’s important to build a team of advisors to guide and support you along the way. I collaborate closely with attorneys such as Evan and financial advisors to ensure my clients are protected, informed, and empowered every step of the way.”
Evan Schein is a partner at Berkman Bottger Newman & Schein, LLP, where he focuses exclusively on family and matrimonial law. The firm maintains offices in New York City, Westchester, Long Island, and New Jersey.
Whitney Bagliebter is a Licensed Real Estate Salesperson for Compass.