3 Tips for Protecting Your Detroit Real Estate Assets When Going Through a Divorce

Many states follow either “community property” or “equitable distribution” laws. Community property states generally divide marital property equally between both parties, regardless of who acquired it. On the other hand, equitable distribution states aim for a fair division, which doesn’t necessarily mean equal. Understanding which approach Detroit adheres to can help you anticipate what may happen to your property in a divorce.

For example, if you’re in a community property state, any real estate acquired during the marriage will likely be split equally. If you live in an equitable distribution state, factors like income disparity and contributions to the property may influence the division of assets.

Another crucial distinction is between separate and marital property. Generally, any property owned before marriage is considered separate property, whereas assets acquired after marriage fall under marital property. However, real estate can be complex. Even if you owned property before marriage, if marital funds were used to improve or pay for it, it might be considered partly marital property.

In Detroit, it’s essential to consult with a divorce attorney familiar with local real estate laws. An experienced lawyer can help you navigate these distinctions and provide valuable advice on categorizing your assets to your benefit.

Disagreements over the worth of a property can quickly become a point of contention in divorce proceedings. One party might claim the property is worth less to minimize settlement payouts, while the other might overestimate its value to secure a larger share. An appraisal by a qualified professional eliminates this guessing game by providing an unbiased value based on the current real estate market in Detroit.

Since real estate appraisers can vary in expertise and knowledge of specific neighborhoods, it’s wise to select a local appraiser with a solid reputation in Detroit. Look for someone with experience in divorce cases, as they’ll understand the nuances involved in such valuations. An experienced appraiser will also be aware of local factors that may influence property values, such as nearby development projects or recent shifts in property demand.

If you own multiple properties, consider having each one appraised individually to get a complete picture of your total real estate wealth. While appraisals come with fees, this expense is a worthwhile investment when it comes to ensuring a fair settlement.

A buyout allows one spouse to retain ownership of the property while compensating the other for their share. If, for example, you want to keep the family home, you may be able to buy out your spouse’s share. This can be beneficial if you wish to avoid selling in a weak real estate market or maintain stability for children involved.

To make a buyout work, you’ll need to consider how much liquidity you have, as well as financing options if cash is limited. Some couples opt for refinancing the mortgage to facilitate a buyout, allowing the remaining spouse to take on the property fully. However, this will depend on your income and credit score, so make sure to consult a mortgage advisor before deciding.

Sometimes, neither party wants to relinquish their share of real estate, or a buyout might be financially impossible. In these cases, creative division strategies can help both parties maintain some control or benefit from the property. Here are a few alternatives:

• Deferred Sale: A deferred sale order is a common solution when children are involved. It allows one parent to remain in the family home until a specific event, like a child reaching 18. This arrangement is useful when selling isn’t ideal but maintaining stability is a priority.
• Co-ownership Agreements: For investment properties, co-ownership agreements can allow both parties to retain their share while splitting rental income. This arrangement may work well if you have a positive relationship with your spouse and can agree on property management.
• Selling in a Favorable Market: If the current market in Detroit isn’t conducive to selling, consider a short-term co-ownership agreement with a future sale date. This way, you can both benefit from property appreciation while deferring the sale until market conditions improve.

Each of these options has financial and logistical implications, so discuss these ideas with a real estate attorney or divorce mediator who can help determine the best course of action for your unique situation.