It’s no surprise that one person typically wants to hold onto the marital house after a divorce. Keeping the house can bring some much-needed stability to the family and may eliminate a difficult move. I am an advocate of keeping the house whenever possible, but without proper due diligence, keeping the house can create un-expected hiccups, stress, and financial strain.
As a person who has helped countless people find their dream home, I have seen some wild surprises when completing due diligence on a house. There is a reason why the Colorado Contract to Buy and Sell real estate is written in a way that gives buyers every opportunity to analyze and potentially walk away from any property before buying. Purchasing a house is a big deal. It is usually the biggest asset for people and there is a lot of responsibility that comes along with home ownership. So homeowners need to know what they are getting into before they sign on the dotted line. Whether someone is buying a new home or taking over a home they currently live in, I always recommend treating it like a new purchase.
Even in a collaborative environment, where people are working together and where intentions are good, preparing with a thorough due diligence can save everyone time, money, and stress and keep things moving forward. With that in mind, here are 5 things you may want to consider if you are planning to take ownership (and everything that comes along with home ownership) of the marital house.
1. Make sure you can qualify for the loan and afford the monthly payment. I am not a lender so I will not go into to details, but make sure that even if you can qualify, that you also understand how the payment will fit into your new budget. Stressing over paying your mortgage every month may create more stress than it’s worth.
2. Get an inspection: I recently sold my home that I lived in for 14 years. I am fairly handy and I was the person responsible for routine upkeep. With that said, there was a myriad of issues that came up on the buyers home inspection that I had no idea about. There are always material issues to address with any home. They may be small matters and they may be substantial. Either way, I believe it’s important to know what you are getting into before you commit to taking on the responsibility for those items. When getting an inspection, the major components you will want to focus on are:
- Sewer scope – Sewer repairs can range from around $1500 for a small repair to over $15,000 for replacement. Often times, sewer issues are latent, and no one is aware of them until it’s too late.
- Roof inspection. When was the last time your insurance company came out to inspect for hail damage? Roofs don’t last very long in Colorado and replacement may be covered by your deductible. Replacing a roof without insurance can easily come in over $10,000.
- Major components- Furnace, AC, electrical, and plumbing can be big-ticket items. Sometimes they just need a tune up or small modifications, but replacement or major modifications can cost thousands.
- Foundation – Usually major foundation issues are easy to spot and have been known for some time, but getting an inspector to check out the foundation is important. If there are major issues, they will cost major money.
3. Get a C.L.U.E. Report: A C.L.U.E. report is an insurance claims information report. The report generally contains up to seven years of personal, auto, and personal-property claims history. In other words, this report shows claims on an individual and/or on an asset. If a claim is filed on the roof and the repairs were never made, then the home is un-insurable for future buyers until those repairs are made. This report will give you assurance that there are no out-standing claims on your house that you are now aware of or that have not been completed.
4. Get a title report: Pulling a title report will tell you if there are any liens or encumbrances filed with the county. This search could expose lines of credit, like HELOC’s, or even liens filed in error. It is possible that there are liens that one or both parties are un-aware of. Either way, when the home is sold, those liens will have to be addressed. Make sure you know what you are on the hook for.
5. Get a full loan payoff early: The bank statement that was mailed to you may have incomplete information about the TOTAL payoff for the property. Using a statement rather than a full loan payoff for the property could potentially throw a wrench into things down the line. A monthly statement may or may not show HELOC’s, second mortgages, or other lines of credit, where as a full loan payoff will. When taking over the mortgage or refinancing the house, you will have to pay off the full payoff amount. Make sure you know what this is from the beginning so you are not going back to the drawing board in the twelfth hour.
Placing a final value on a property and taking over full responsibility of the marital house is really no different than buying a new home. You may have lived there 5, 10, 20 years or more, so you have a certain level of knowledge about the property, but proper due diligence may uncover latent issues that you have been un-aware of for years. Taking the time to understand your new investment will payoff in the end.
Daniel Gomer is a Certified Divorce Real Estate Expert and is proficient in the sale of real property in family law cases. Along with the CDRE Certification, Dan also holds a Real Estate Collaborative Specialist (RCS-D) designation. He is a neutral, unbiased, third party with extensive knowledge, skill, training, and experience in negotiating sensitive, high conflict, and complex real estate transactions. With over 8 years of experience and over 100 homes sold throughout Denver Metro, Daniel has been able to leverage his experience as a teacher, coach, real estate investor, market trend enthusiast, Realtor, entrepreneur, and student to help people navigate challenging real estate sales transactions.
For more information please visit Your Castle Real Estate website below:
www.dangomer.com