Divorce and Its Impact on Shared Real Estate Investments

Real estate is one of the most stable investments available, so it’s no surprise that many divorcing couples with strong finances have shared real estate investments. While real estate can provide new streams of income and financial stability, it can also add significant complications to your divorce. That’s why it is important to choose a Mobile, AL divorce attorney who can help you explore your options, figure out what matters to you, and figure out a way to get there. 

Ready to start planning for your divorce? The team at Kirk Drennan Law is here to help. Call us at 205-953-1424 to schedule your consultation right now. 

Division of Shared Real Estate Investments       

In Alabama, marital assets are divided in an equitable way. This means that both parties don’t necessarily get half of each asset’s value; instead, the goal is to split up assets in a way that considers both parties’ contributions to the marriage, separate assets, and earning capacity. This principle applies to all shared real estate investments. The family home, vacation homes, and rental properties are all up for division in a marriage, assuming that they are considered marital property. 

Dividing real estate is obviously more challenging than splitting up a checking account or stocks. You can’t simply transfer real estate to one party, especially when there’s a mortgage attached to the property. 

Considerations When Dividing Real Estate Investments     

There are some considerations to keep in mind when deciding how you would like to handle real estate investments in divorce. It’s helpful to know what each party wants—if one party wants to keep the property and the other wants to give it up, that can make the entire situation much easier. Of course, in this situation, the person who wants the property will still need to be able to refinance the property in their name and pay out the other party.  

If both parties want to sell the property, this may take a bit longer, but at least there’s minimal negotiating to be done. It is recommended, though, that you do substantial research on the real estate market. The worst outcome is when both parties want to keep the property. When this occurs, there are several things to consider. 

First, is there a mortgage on the property? If so, you’ll need to think realistically about who can afford the mortgage, as well as the other expenses that come with property ownership—taxes, insurance, repairs, HOA fees, and upgrades. 

It’s also important to consider the use of the property in question. If it’s the marital home, it may make sense for the person with primary custody of the children to keep the home for the children’s stability. If the property in question is an investment property used as another income stream, you may want to think about the work and expenses that come with a rental property.  

Who is prepared to put in the time needed to maintain the property, show it to potential tenants, respond to repair requests, and cover the mortgage on months when the tenants skip out on rent? If a property management company is currently used, is one party more capable of covering those expenses than the other? 

How These Investments May Affect Alimony      

The division of valuable assets, particularly real estate, may affect spousal support. Consider, for example, a couple that owns an apartment building that brings in $6,000 per month in rent and has a $1,500 mortgage. If minimal spousal support is on the table, the lower-earning party may opt to fight for the rental property.  

They would rather upgrade the property to make it worth more and bring in more money than continue to receive funds from their ex-spouse. In this case, the parties may negotiate an agreement where the higher-earning spouse does not pay spousal support but gives up all rights to the rental property. 

This is just one example; there are many ways that spouses can negotiate a divorce settlement agreement that meets both parties’ needs and allows the marriage to come to an amicable end. 

Facing Divorce? Call Kirk Drennan Law Today  

Shared real estate investments can complicate your divorce, but with the team at Kirk Drennan Law by your side, you can advocate for what is best for you. Get started now by calling our team of Mobile divorce attorneys at 205-953-1424 or sending us a message online.