Should I Sell My Home During the Coronavirus Pandemic?
As the coronavirus (COVID-19) continues to impact individuals and businesses globally, we will discuss its impact on family law issues and how you can get through it. Below is one of the time-sensitive questions asked by families during this time:
Should we sell our home during the Coronavirus pandemic?
It is no surprise that the housing market is negatively impacted by the COVID-19 pandemic. According to California Association of Realtors home sales fell from both the previous month and year in March as the coronavirus pandemic began taking a toll on the housing market, especially in the last two weeks of the month as the state’s stay-at-home order was put in place. While this downward trend in the market is expected, it creates a difficulty in listing, showing and staging your home. As such, while most families would want to wait to list their homes, for others this may be a good viable option.
Consider Waiting:
Consider waiting out for the pandemic to be over prior to selling your family home if you are able to live amicably without the added emotional stress to your family. If you decide to wait out the market, reach agreements on how joint expenses will be paid. Consult an experienced attorney or a qualified mediator regarding preserving your reimbursement claims and any potential support claims.
Consider Selling:
Consider selling your home if your living situation is such that it is having an impact on your emotions, physical or the mental health of your family. Families who are experiencing hostility and an unsafe living environment may not want to wait for better real estate market. There is a realist concern about the rise of domestic violence and child abuse during this time. As such, it is imperative to put health and safety concerns before financial concerns. For many Bay Area families, selling their home is the only way they are able to afford living in two separate households.
What to consider if you are selling your home:
Prior to listing and selling your home you want to discuss and address the following issues with your spouse:
1. Agree on a realtor to use and the listing price. If you are not able to agree on an agent, you can each have your own listing agent so long as the both agents agree to the arrangement and the allocation of their fees.
2. Agree in advance regarding any improvements you will make on the home or sell it AS IS. Discuss what needs to be done and how you will pay for it.
3. Agree in advance on how you will divide the net proceeds from the sale of the home. If you have separate property [1] claims or reimbursement claim, you can set aside the disputed portion in a joint account [2] until you can agree to its division (or obtain a Court Order). This will ensure the sale can move forward smoothly without any delay or additional costs and fees.
4. Gather documents that you may need to support your separate property claim or claim of reimbursement. You may want to consider scanning these documents in advance and sharing them with your spouse.
5. Talk to a tax advisor and ascertain how much, if any, tax obligation you may have from the sale of the home. Agree in advance to set aside a portion of the net proceeds from the sale of the house in order to cover your joint tax obligation.
6. Prior to close of escrow, agree on how personal property will be divided. You should come up with an agreement that divides the community personal property [3] fairly equally. Keep in mind, this division does not need to be a physical division, but an agreement allowing you to each retain the same value of the property.
6. Any agreements you reach in advance, will save you attorney fees and costs in the future. Ensure that your agreements are legally enforceable and in writing. As such, you may want to consider retaining an experienced attorney or a qualified mediator to properly prepare your agreements.
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[1] Family Code Section 770 defines Separate Property as:
-All property owned by the person before marriage.
-All property acquired by the person after marriage by gift, bequest, devise, or descent.
-The rents, issues, and profits of the property described in this section.
[2] Consider having restriction on this designated joint account; e.g. requiring dual signature for any withdrawal.
[3] Family Code Section 760 defines Community Property as: "Except as otherwise provided by statute, all property, real or personal, wherever situated, acquired by a married person during the marriage while domiciled in this state is community property." Note that while property may be characterized as community property, a party may have a separate property claim to it or the property may have changed its character through a written instrument.
