For couples who’ve decided to end their marriages, the question of what to do about the family home adds complexity to the divorce process. The recession has taken a bite out of nest eggs nationwide, across every demographic. High unemployment rates have not helped matters, and financial strain itself has fueled marital discord and divorce.
Selling the family home is a big challenge for many couples looking to divorce. Once, the marital asset of greatest value, for many, it has become an albatross. When neither spouse can afford the mortgage by themselves, and if the house cannot be sold for enough to pay off the lender, some people are deciding not to divorce, and instead, try to work out their differences. Others have decided to delay divorce. Couples set on splitting up are finding creative solutions to this housing dilemma. Here are some of the options:
(1) Becoming Roommates: Not for everyone, but a great many couples now find it a financial necessity. Should be attempted only by emotionally stable spouses parting amicably. Here’s how it works: The couple divorces or legally separates, but they share the home temporarily, as roommates, until the home can be sold. The reward for patience and getting along is the chance to sell the house when the real estate market turns around, preserve credit ratings, and maybe even walk away with a bit of cash. If there are children in the house, remember that little eyes will be watching how Mom and Dad treat each other under the new arrangement; there is a lifelong benefit for children in seeing their parents interacting respectfully and cooperatively in the course of, and after, divorce. Ground rules and courtesy are essential to keep the peace.
House Sharing Plus: One fairly amicable, middle income, Bay Area couple with an underwater condo and a 5 year old child negotiated a creative stop-gap solution that accomplishes several of their joint goals: it keeps their child eligible to attend their chosen neighborhood public school, prevents a financial loss from a short-sale on their home, and gives their child more stability during the family’s transition. The couple worked out a modified house sharing plan that includes a one-year lease on a studio apartment. The child stays in the home and the parents rotate between the two residences. This arrangement requires a lot of flexibility and courtesy between the adults, but because both parties value what they stand to gain from the arrangement, they say it is worth it to them. Memorializing the terms of the arrangement, rules and what each party can expect, including an agreement on how disputes will get resolved, helps things run smoothly.
(2) CoAbode – Single Mothers House Sharing can be wonderful short or long-term solution to the housing needs of divorced mothers and their children. CoAbode facilitates house sharing opportunities for single mothers and their children in cities all across the country. For many women, house sharing may be the only way to keep their homes. Likewise, it gives single mothers who are looking for rental housing an alternative to apartment living. Aside from the financial benefits of house sharing, a camaraderie and friendship can develop that is supportive for both families. CoAbode has received gobs of national press (Good Morning America, NPR, USA Today, CNN, ….) and plans to offer a similar service for single fathers and their children in the future. See their website to learn more: www.coabode.com.
(3) Short Sale to Avoid Foreclosure: If the mortgage obligation cannot be met, if the house is worth less than the mortgage obligation, and if the family home is in danger of foreclosure, than a “short sale” might be a solution. Many lenders will work with borrowers to execute a short sale wherein the borrowers find a buyer willing to pay fair market value for their home, and the bank agrees to forgive the difference between the sales price and the mortgage amount. Typically, a borrower must prove that they are financially insolvent to be eligible. About.com has a brief and informative article on options for stopping foreclosure: http://homebuying.about.com/od/4closureshortsales/qt/011708_stopfore.htm. A real estate attorney can provide legal advice and negotiate with lenders on borrowers’ behalf.
Professional legal advice is key before making any decisions about who will live where. See How to Choose an Attorney for tips on how to find the kind of attorney you need.
