Selling property during COVID-19: The housing market at the moment is going through a great deal of uncertainty thanks to the COVID-19 pandemic, with many sellers withdrawing from the market and buyers putting their purchase plans on hold. However, in some cases you may not have much of a choice when it comes to selling property during COVID-19, such as if property orders in your family law matter demand that certain matrimonial property is sold. If you don’t have the option of “wait it out”, as is being recommended by financial advisors with regard to dealing with property at the moment, what are some tips for how to go forward in this difficult time?
The experts are describing the current housing market as fluid and evolving daily, very vulnerable to the pandemic, and with long term impacts virtually impossible to predict. The market itself looks quite different in practical terms, with virtual home tours, private inspections and online auctions now the new normal. With all the uncertainty and fear in the market, the real estate industry is bracing itself for a crisis of its own, and many prospective sellers and buyers are being warned it’s probably better to ride out the pandemic before making property-related decisions. But that hasn’t stopped so-called “divorce-driven sales”, where the need for a quick sale has been putting downward pressure on property prices.
With sellers being advised to rethink their timing and ask if it’s in their best interests to hold onto property for now, if you don’t yet have property orders then now is the time to negotiate with your former spouse about the terms of how your property should be divided, with the common understanding that current property values are being drastically affected by the pandemic’s fallout. The option not to sell should be seriously considered.
If you don’t have to sell right now
Speak to your bank about your relationship breakdown, as they have ways to assist customers going through a separation. They may be willing to agree to change the terms of a mortgage so that you have better cash flow at this time. Let your bank know your circumstances and ask what options they have to assist you. Everyone’s situation is unique, but some banks will lower mortgage repayments for a certain time period (for example, they may reduce them to interest only repayments rather than principal plus interest repayments) or a “mortgage repayment pause” for people who are ahead on scheduled payments.
If you and your ex-partner agree to hold onto a joint property for a period of time pending the real estate market stabilising, you should seek legal advice about this. You and your spouse will need to make a legally-binding arrangement regarding the mortgage repayments, household expenses, maintenance and repairs, and so on.
You may be able to consider “separating under one roof” with both partners remaining in the family home despite being separated. This often works with families where parents wish to minimise the disruption to children’s lives—but of course depends on the level of amicability between you and your ex-partner.
If you can’t face the idea of living in the same house, you might consider other creative ways to avoid selling. The building industry has reported an increase in people building granny flats on existing properties or making alterations and additions (like adding extra floors) to reduce the need to sell. Some couples have renovated their home to become a “two in one” residence with separate private areas and designated shared, common areas. Subdivisions are also more popular, with couples selling off the land that’s subdivided to enable one partner to leave.
If you do decide to sell the home, you should both be involved in choosing the real estate agent and working out the sale process.
Reaching agreement on the family home can take time so bear in mind the time limits in family law. As soon as you are separated you can immediately begin negotiating a property and financial settlement—there’s no need to wait until you are officially divorced. But do note there is a default time limit of 12 months to start court proceedings once you are divorced or two years from the date of separation if you were not married (and in a de facto relationship).
What happens if you have property orders requiring selling property during COVID-19?
Unfortunately there is no magic solution so experts advise that you speak to your real estate agent about a strategy for your particular property and market—and it makes sense to take the advice of those who are experts at reading markets. You should speak to your ex-partner about this and perhaps both speak to the real estate agent to come up with a plan that you are both happy with.
You should also make sure you go into the process after taking stock of your whole financial situation and bearing in mind the effect of the pandemic on your income and resources, so you can make realistic choices and sound decisions for the future.
If you do need to sell your family home or you and your ex-partner cannot reach an agreement, consulting a family lawyer as well as a financial advisor is a good idea, because of the many variables involved (apart from the changing property and financial markets, changing regulatory environments, for example). As always with property-related divorce issues, make sure you don’t agree to sell or sign anything without first getting expert advice. Take your time to think things through.
Aside from the family home, if commercial property is listed on your marital balance sheet, it’s a very similar situation. Buyers are wary of commercial property right now, and many have simply hit pause due to the pandemic. If you can adopt a wait and see approach and work out another way to divide the commercial asset, great. If you have a family law property order requiring you to sell the asset though, you should similarly speak with your real estate agent on how to proceed.
If you are concerned with a former spouse attempting to sell a property in which you believe you have an interest, you may need to look into lodging a caveat (if it’s not in joint names). This statutory injunction is used in family law to ensure a property you have an interest in isn’t sold or encumbered by a mortgage without your input. And if a caveat fails, another option is to apply to the family courts for an urgent injunction to restrain another party from doing certain things such as selling real estate.
If you need assistance with a family law matter, please contact Canberra family lawyer Cristina Huesch or one of our other experienced solicitors here at Alliance Family Law on (02) 6223 2400.
Please note our blogs are not legal advice. For information on how to obtain the correct legal advice, please contact Alliance Family Law.
Source: Smart Property Investment