As a divorce attorney in Schaumburg, I have seen complex cases through the court system. One of the more complicated issues that I deal with on a regular basis is equity division. Especially in the case of family homes, equity division deals with many complex emotional and financial decisions. I help my clients make sense of their alternatives and the long-term potential of each option. My goal is to help them put themselves in the best possible positions for their families’ futures.
Introduction: What Is Equity?
Equity is an idea with which most homeowners are familiar, but I will explain it briefly here. It represents the value that you have in a home or another piece of property. You would typically calculate equity by appraising the property and then subtracting from that valuation any liabilities you have — mortgages, for example. Of course, the equation is not always that simple.
Why Do You Need an Equity Division Lawyer?
During a divorce, it becomes quite difficult for a couple to decide whether to keep or liquidate the marital equity, especially their home. In most cases, spouses decide to sell the home and split the money, while in others, one spouse may keep the home by buying it out from the other spouse. No matter which option you choose — liquidation or a sale between spouses — it is crucial to determine the value of marital equity in order to reach a fair property settlement.
Since this issue is as complex as child custody and support, you will need an experienced equity division attorney by your side. There are some cases in which this is even more of a necessity, such as:
- If the house was purchased before marriage
- If you or your spouse inherited the house
- If one spouse’s current financial situation prevents purchase of the other spouse’s share
- If there is intense disagreement about whether to sell the house
- If your spouse is obstructing the sale
- If the property is in financial distress
- If you cannot agree on a valuation or a method thereof
- If the house needs work before it can be sold at a favorable market price
- If you would simply like the fairest, most efficient solution possible
My team of experienced attorneys at the Law Office of Fedor Kozlov, P.C., has helped many clients to get through the divorce process, specifically the equity division phase. We use our skill, attention to detail, and knowledge to understand our clients’ cases, developing creative and unique solutions to protect financial interests and pursue long-term goals. Please contact us for a consultation, or feel free to read on for more information.
The Financial Side of Equity Division During Divorce
Equity division is among the most complicated components of a divorce, as it involves real estate valuation based on the ever-fluctuating housing market. Further, the spouse who decides to keep the home will most likely have to refinance the mortgage — a process which is itself subject to market conditions, such as interest rates.
Finance can bring up several challenges if the spouse who wants to keep the house has a low income or a bad credit score. They may be left with no option but to sell off their home if they cannot afford to make regular mortgage payments or unable to refinance the loan.
Equity division in a divorce can get very confusing and intimidating when the home is on the verge of foreclosure or short sale. Our attorneys are thoroughly equipped to navigate through this complex situation. We understand the relationship between divorce, bankruptcy, and foreclosure, and we are experienced in guiding clients through the process to the best possible outcomes.
If you are in this situation, you probably have questions. You want to know whether it is possible to acquire a loan modification. Should you even try to keep the home? Maybe your resources would be better directed elsewhere, but maybe staying put is the best decision. We can help you understand your position from a financial and legal perspective, and we can help you choose the best path forward based on your personal goals.
Determining your Home’s Value
Under Illinois state law, all marital property must be divided equitably between the spouses in a divorce, and this includes any equity in the marital home. You can determine equity by subtracting your home’s value by any outstanding payments such as a mortgage.
You can rely on our attorneys to conduct a proper valuation of your home if you and your spouse cannot decide on its value. Our attorneys work with industry professionals such as property valuators, inspectors, and appraisers, to help you with complicated financial calculations and determine your home’s value.
Preparing Your Home for Sale
Selling a home is a major endeavor under normal circumstances. During a divorce, it is almost always overwhelming. Fortunately, our attorneys are highly experienced in selling real estate of all kinds within the context of even the most contentious and complex divorce proceedings.
There are many prerequisites to selling your home, not the least of which is reaching an accord with your spouse. After you establish the basis for your sale, you will probably find that many of the more mundane aspects of listing and preparing your home for sale take on a unique and challenging aspect due to your divorce. Here are some examples:
- Choosing a selling agent: Under normal circumstances, you might choose an agent based solely on prior relationships, services, or commission offers. However, those personal relationships might turn from assets to liabilities if they favor one side of the marriage. Further, not all agents are adept at handling the unique communication needs of a divorcing couple.
- Establishing an asking price: You will have your home’s valuation on which to base your asking price. However, advertised prices also strongly affect market interest and eventual sale price, both of which might be pertinent to your divorce case.
- Storing personal items: During the staging process, most selling agents would probably recommend that you sell some of your personal effects or put them in storage. Accountability and oversight during this chaotic reorganization process are critical to avoid future conflict about misplaced items and asset division.
- Performing repairs and remodeling: Any money that goes into your home during the selling process should be subject to the highest level of scrutiny. These investments might seem reasonable from a certain perspective, but you would want to make sure that the amount of effort and stress these projects might generate in negotiation did not outweigh the increases in sale price you could receive.
- Assessing and accepting offers: Assessing buyers’ offers could be stressful, especially when you and your spouse do not exactly see eye to eye. In the worst-case scenario, this would be an ideal time for your spouse to obstruct the sale of your home while pretending to go along with the process. Careful planning might be necessary to avoid conflict at this stage.
- Closing the sale: Closing a home sale almost always involves a real estate attorney. In your case, it will probably also involve two teams of divorce attorneys who provide additional oversight. This should further secure the transaction, but it can be frustrating for both the buyers’ and sellers’ sides if the process is not handled correctly.
Buying Your Spouse’s Share (or Selling to Your Spouse)
If you decide that one of you wants to keep your house, the other will have to purchase the remaining equity that is not awarded in property division. This has the potential to be a relatively straightforward transaction, but the financial and tax consequences can be far-reaching.
A home provides stability, but it does not let you buy groceries, pay bills, and so on. Furthermore, there are costs to consider, such as maintenance and tax. The purchasing spouse should take special care to ensure that retaining the home is part of a sustainable strategy.
If it seems like a good idea, then nearly any type of asset in the marital estate could be traded off for the home. It would depend on your situation, but examples range from paying a lump sum from a separate bank account to exchanging the equity in a home for the ownership interest in a privately held company.
Contact Experienced Equity Division Attorneys Today
At the Law Office of Fedor Kozlov, P.C., we take a personalized and straightforward approach to our cases. Our goal is to provide our clients with practical information and in-depth legal counsel they need when they go through equity division in a divorce.
We take all the time necessary to understand your goals. Then, we present different options available to you along with their potential benefits and implications. Contact the Law Office of Fedor Kozlov, P.C., today at (847) 241-1299 to schedule a consultation with one of our experienced attorneys. We will set aside a dedicated time to evaluate your legal options.