If you and your spouse are going through a divorce, one of the first big decisions will be deciding whether you are going to sell the family home. Depending on your circumstances, selling the home could be your best option as each spouse will walk away with money to start anew. However, the process of selling a home during a divorce is a little different than selling a home under normal circumstances. Keep reading as we discuss the caveats to selling your home during a divorce.
Automatic Temporary Restraining Order
When you and your spouse file for divorce, the court may issue an automatic temporary restraining order, or ‘ATRO’, to freeze your assets. The ATRO will keep you or your spouse from selling or transferring marital assets and will most likely include your family home. Although this may sound like an inconvenience, the ATRO serves to protect the interest of both spouses as it preserves marital assets until the parties agree to an equitable distribution.
It is important to anticipate the ATRO if you are considering putting your home on the market. If both and your spouse agree to sell the family home, you can work with your lawyers to have the ATRO modified. Your lawyers will petition the court to lift the restraining order, and this will allow you to list and sell your home. Keep in mind that the court will typically only allow for a modification if both you and your spouse agree to the sale.
Hiring a Real Estate Professional
Under normal circumstances, a couple may list their home without consulting a real estate agent or broker. However, it is advised that when going through a divorce, the couple strongly consider hiring a real estate expert to handle the sale. Divorces can be time consuming and mentally draining and hiring a real estate professional can alleviate a lot of that stress. A real estate agent can act as an intermediary between you and your spouse and offer their expert opinion for determining an asking price and how to counter any offers that may come in on the home. This will save you many arguments with your spouse and streamline the process.
You will most likely work with an attorney to draw up a sale contract and escrow agreement for the sale proceeds. The escrow agreement should account for any outstanding debts on the property and any other payments you and your spouse have agreed to make with the sale proceeds. If one spouse has assumed responsibility for making the mortgage payments throughout the separation period, that spouse may be entitled to a higher amount of the sale proceeds. Typically, the sale proceeds will be prorated to account for any additional monies paid by one spouse.
Deciding to sell the family home during a divorce can be a great option as it puts more cash in everyone’s pockets and can be one less asset couples argue over. However, it’s vital that couples anticipate working with attorneys and real estate experts throughout the process.