What Happens When You HAVE To Sell Your Apartment in a Divorce?
My overarching goal is to provide you, my clients, with confidence in the big decision of buying or selling an apartment or house. Over 15 years, I’ve represented lots of people upgrading apartments as their family grows, or upgrading to a house in the suburbs- and leaving the city behind. At the same time, I’ve had the good fortune of working with people who are leaving the suburbs and enjoying their empty nest in a city apartment.
However, in the case of divorce or death, I have represented clients who may not want to sell their apartment, but have to. In some cases, I’m surprised to see otherwise intelligent and successful people overlook important details which end up costing a lot of money in the end. Since nearly 50% of couples end marriages in divorce, I imagine that this has relevance to my clients, or perhaps to all of my readers.
So this month, I reached out to Janice Roven, an Upper West Side-based matrimonial attorney. She provided some insight into what those getting divorced forget when they are otherwise busy focused on different details of their divorce.
As you may have heard, real estate is often the biggest asset of a family. While it isn’t ignored per se in the negotiations of a divorce, some of the important details get ignored, often until it may be too late in divorce proceedings.
we know your can’t split the baby, at least.
I asked Janice if divorcing couples bring up their real estate in a nuanced way other than that they need to sell it. Of course, the apartment may be appraised as part of valuing all of the assets, but she writes, “You are in the middle of negotiating the terms of your divorce. The last thing that you will probably think about is the real estate broker for the sale of your apartment. You are also probably not thinking of all the things that may need to be done to prepare the apartment for sale to maximize the sale price. These are issues that can be provided for in the divorce agreement.”
I asked her about other things people forget. She writes, “Funds for the apartment to be staged. Funds to do small renovation projects – painting, cleanup, caulking, regrouting, etc. You should also speak to your lawyer regarding a provision in the agreement regarding the choice of broker. The provisions for the appointment of the broker can be simple, i.e., the wife will have the right to appoint the broker. Another option is that each person can choose one broker and if they can not decide, a third broker will decide.”
People also forget the stress level that selling an apartment creates, even in the best of times. She writes, “Divorce is one of the few things that is thought of as more stressful than the sale of a residence- while dealing with a death is just a touch higher on the list. You want to make sure that you are working with a broker who understands your goals. Although a broker may not seem to be important while you are in the throes of a divorce, a provision regarding the broker and or an apartment stager will make your life easier in the long run.”
I asked her if she could think of a few more things that people forget to include in costs to prepare the apartment for sale. For instance, she wrote me about funds for staging. I asked her to break “staging” into more segments.
We went through a longer list of items that people had not considered:
Painting or Handyman work- where do people go while an apartment is being prepared for sale? Are there funds to cover a hotel or other accommodations?
Decluttering- Assuming that there are things to get rid of as part of decluttering, including furniture, books, or special items- how to divorcing couples agree on what gets thrown away? This could easily get very messy.
Buying things for staging- what if items need to be purchased for staging? Who keeps these items in the end?
Storage- who pays for storage costs for things that need to get out of the apartment for marketing?
SECURITY- What if there’s no doorman in the building where you’re selling? Do we need to avoid hosting public open houses if the spouse isn’t allowed in the apartment? My imagination ran wild on this one.
The list could go on, unfortunately. And it does.
I asked Janice for an example of something else couples had not considered. She wrote, “I have a client who is going through a divorce. They are selling a house. There were several issues that we had to get past before we could get to the percentages each would realize from the sale. With respect to the choice of brokers there were many options. One broker was willing to sell it as is. Another broker felt that the couple could do better with some improvements, i.e. painting and a good cleaning. Yet another broker felt that a complete staging would enable the parties to realize the greatest gain. We had to structure an agreement on the broker. The husband wanted to sell the house as is or he would paint it himself. The wife felt that the husband painting would make it worse. Further, the wife wanted to repair the walls, paint and stage the house. The negotiations were no longer about the percentages each person will derive from the sale of the property, but how the property will be sold. The sale of the house took on a life of its own. If these issues were not outlined in the agreement, the sale of the property would have been delayed.”
What about the commission structure on the sale of a property? I imagined, and Janice agreed, that divorcing sellers also often couldn’t agree about what commission they were willing to pay a brokerage firm to sell a house, even if a too-low percentage may hamstring or delay the sale. Not pretty, either. Janice did an interesting video about the effect of divorce on people’s credit. I found this very important to consider as well, since, well, life goes on after a divorce- and poor credit may impact someone’s ability to buy again, or even rent again!
Many thanks to Janice for a deep dive into the murky waters of divorce.