Splitting up is hard enough without squabbling over real estate.
But that’s exactly what happens when many couples divorce, if they own property. Some might disagree on who keeps a home or how to sell it. And the stress can add to already-heightened emotions.
When Matthew Williamson, 36, and his then-wife began the divorce process in 2010, two homes were an issue.
In 2006 he purchased a two-bedroom home in St. Louis. Two years later, he and his wife moved to Illinois and bought a home in Bolingbrook, hoping to grow old together in the three-bedroom, two-bathroom house.
But then the recession hit. They rented out the St. Louis home, but property values dropped so fast they could only rent it for about half of their mortgage payments, he said.
“That was just one of the main things that drove us to divorce,” said Williamson, who now lives in the West Rogers Park neighborhood. “It was a constant arguing of what to do with these properties.”
He saw no other solution than foreclosure, but said his then-wife at times disagreed. “There was a lot of tension.”
By the time his divorce was finalized in 2012, both homes had been disposed of — the Illinois home was sold in a 2011 short sale and the St. Louis property was lost to foreclosure in 2012.
“It created a lot of fighting between us, what to do with the house, and it was a kind of thing that was simmering under the surface at all times,” said Williamson, who works at the AIDS Foundation of Chicago.
This isn’t uncommon, say people who help ruptured couples through this process.
“As complicated as relationships and marriage can be, so can divorce be equally complicated,” said Joslyn Ewart, founder of Entrust Financial, a wealth management firm based in Wayne, Pa.
Divorce laws vary by state, and no amount of preparation can completely eradicate the difficulty, emotional and otherwise, of a dissolving marriage. Still, thinking through certain questions and implications may ease the process. Experts agree: Difficult decisions will need to be made.
Who wants to stay? Couples typically take a variety of paths. Some might agree to sell and split proceeds 50-50. Often many essentially buy out the other spouse, said Sonny Thatch, who heads the Chicago-based Thatch Law Group. Or a couple may agree to delay a sale. For instance, one parent might stay in a home until kids are at least 18, and then the home might be sold, with the spouses splitting up the proceeds.
That’s if both parties agree.
If they don’t, a divorce can land in front of a judge. Who keeps what depends on a number of things, Ewart said. Who owns the property? Did it appreciate in value during the marriage? Who initially paid for it in the first place? How does the couple want to split the assets?
Evidence might include how the home was acquired and maintained. A judge might consider, for example, not only who purchased the property but whether one person did repairs.
Even if only one spouse’s name is on the mortgage, anything acquired during the marriage is considered marital property, Thatch said.
Cadey O’Leary, a broker at Jameson Sotheby’s International Realty who works with properties in the Lincoln Park and Lakeview neighborhoods, said working with clients getting a divorce includes many typical challenges — discussing pricing, agreeing to updates — but with an expanded emotional role, sometimes as counselor.
“We’re in the business of helping people transition from one life stage to the other,” she said. Those might be, she added, “wonderful circumstances when people are upsizing and they’re buying a bigger home and they’re excited, but also in circumstances such as death and divorce.”
With the latter, complications can arise. Sometimes one person — or both — might want to stay in the home. Or two parties may disagree on how to best advertise a place or bolster its appeal. One spouse may want to take an early offer to finish the process, while the other wants to wait for a better deal.
Her advice doesn’t change based on clients’ situations, she said. But divorce adds complexities, like extra attorneys and appraisals if each party hires one. And she emphasizes against making an emotional decision.
“If we’re in the market we’re in now, and a house that’s priced well in the market and it’s a lowball offer, I would advise against it,” she said.
What helps is agreeing on many things beforehand — a timeline of how long one party will stay in the home, for example. Or, if selling, settle on a budget for staging and come to an agreement on other enhancements, such as painting the main living areas but not replacing the carpeting.
“There’s got to be a lot of diplomacy,” added O’Leary, who said that her own divorce gives her an extra-empathetic lens.
Something that can’t fit into finances? Emotional attachment. Sometimes it’s called the “‘marriage museum,” Ewart said.
Houses can be filled with memories — but also hopes and dreams. Even if you don’t have children, perhaps you planned on raising them there, or retiring together on the front porch swing.
Ponder past the emotions. Ewart recommends that, for example, a husband who wants to keep the home but cannot afford it shouldn’t risk his financial future to do so.
If one partner has better credit, he or she might qualify for a better interest rate, which can save money over the life of a loan.
Spouses who might not have held the financial heavyweight job should be building their own credit, experts said. Without that, “You don’t have the earning power to start a new life,” said Sharon Allen, president of Sterling Wealth Management in Champaign.
One thing Thatch has noticed is separated couples continuing to live together while their divorce is finalized. Perhaps someone sleeps on the couch, for instance.
This can be for a variety of reasons — to maintain continuity for children, or because neither party can afford to live on their own. Or, he said, sometimes it’s a power play.
“Neither party wants to budge,” Thatch said. “They say if they leave, they look as though they conceded.”
Although he doesn’t suggest this living agreement, because the divorce is then “right there every single day,” if people attempt it he suggests dividing up monthly bills and paying for things equally.
Mary Kay Cocharo, a licensed marriage and family therapist in Los Angeles and an expert affiliated with Marriage.com, is working with a couple who is separated and headed toward divorce but still in the same home. She counsels setting boundaries. Decide who will use what part of the house, who drives which car, where each person will sleep.
“Clarity and conversations about these matters go a long way in heading off confusion and angry misunderstandings,” she said.
And set ground rules on guests — or not entertaining them at all. “If either party is dating, those should happen away from the home where both parties live.”
Because not everyone can afford a lawyer throughout a lengthy divorce, Thatch said his law group caters to low- and moderate-income individuals with fixed fees and other alternative options. He might, for example, assist a client for an hour or two during a final negotiation over a home, he said.
Not yet married? Time to talk. “When people are getting engaged and they’re kind of dewy-eyed about it, it’s so difficult to have a real meat-and-potatoes conversation about financial planning,” Allen said.
She encourages people to factor property into prenuptial agreements and consider consulting an attorney.
“Most people are going to go through some type of premarital counseling,” she said. “You need to add money questions to that conversation.”
Before the wedding, ask things like, “What’s important to you about money?” or “What are your personal financial goals?”
And because sorting our real estate in a separation is so thorny, consider waiting until you’re married to purchase that place.
“If you’re not married, but you’re in a long-term relationship, I think in those situations you have to be really cognizant of the overall financial picture,” Allen said. “If you’ve built a home and a life in a particular home, and just one partner owns it, that could get really messy.”