Hit Pause Before You Sign over Investment Properties in a Divorce

Buying real estate tends to be a complicated process. When you purchase a home with another person who then has an interest in that property, the rights that come with ownership get a little more complex. Most couples buy a marital home together and, when they have the ability to do so, could add investment properties to their marital estate as time goes on. After all, real estate can be a good investment.

Jointly owning such a mix of real properties can create a nightmare when it comes to asset division. A married couple will be joint owners of any real estate purchased during their marriage (barring a few exceptions, of course). That makes it impossible to sell without the consent of both spouses, which can sometimes be a growing point of contention when trying to negotiate a settlement on your own.

Don’t agree to sign on the dotted line just yet

Contentious divorce discussions often lead to hasty deal making when you don’t truly understand that you may be giving up too much. If one party has been the breadwinner, he or she may feel entitled to the majority of the real estate acquired during your marriage. A typical comment we hear is that the spouse pressuring you to sign over your rights indicates that unless you give in, you’ll leave with nothing. It’s a scare tactic that can successfully deprive you of what you’re rightfully entitled to under the law.

Maryland is an equitable distribution state, which means each spouse is entitled to a fair split of all marital assets. Giving up investment properties that you may be awarded can cost you a more comfortable new beginning. Refuse to sign over the property without speaking with a divorce attorney first to understand your options. It may cause your soon-to-be former spouse to become uncooperative, but your attorney will be right by your side fighting to protect your interest.

What you need to consider before giving in

There’s a reason your spouse wants all of those properties to himself or herself. The right real estate can appreciate in value over time until a buyer comes along at just the right moment giving your former spouse a nice infusion of cash to live on. When your marriage is ending, it would be unfair for one party to continue to benefit from a future sale of, or be burdened with ongoing upkeep expenses for these properties.

If your spouse has not asked you to sign over all properties, you need to consider the reasons. Ask yourself these questions:

• What is the value of the properties? In addition to ending up with less than you’d be entitled to receive, you may also deal with tax consequences of these properties.
• Can I afford the maintenance on the properties? Some rentals are more high maintenance than others. It can be a juggling act to keep revenue generating. Your spouse may saddle you with the lower value properties while retaining the money makers. You could be maneuvered into a dire financial position forcing you to sell those properties, even at a loss.
• Why is my spouse pushing me to sign over these investments? Maybe he/she intends to sell them right away to use the money for his/her own family law attorney.

Rental properties can serve as leverage in your divorce

Think about the properties you both own and what purpose they serve. You might find some of them are more useful as bargaining chips than fighting to keep. Your attorney can discuss a strategy with you for working towards your ultimate goal once you lay it all out on front of yourself.

• Marital homes. Some couples have purchased multiple residences over time that serve different purposes. If your spouse has an important reason for retaining any of these, he/she may be more willing to give something else up when push comes to shove.
• Rental properties. If rental properties bring in significant assets, you may have leverage for a greater share of the buyout. If there is more than one unit or building, you may be able to negotiate what you your and what you give up.
• Commercial buildings. If you and your spouse own commercial real estate in which he/she conducts business, your refusal to sell could directly impact not only your spouse, but any partners or employees for that business. To disentangle you from your spouse’s and his/her partner’s business, a judge may require a business valuation be conducted and award you a fair share of the value –possibly by awarding you other properties – in exchange for signing over your rights.

Speaking with a qualified family law attorney with experience in division of investment properties can place you in a much better bargaining position. You can leave your marriage with what you deservedly earned right alongside your spouse.

To ensure you are protected before entering divorce negotiations, schedule a consultation with one of our knowledgeable high-conflict divorce attorneys at the Rockville family law firm at McCabe Russell, P.A. by calling 443-917-3347, or feel free to reach out to us through our contact form. For your convenience, we maintain additional offices in Columbia, Fulton, and Bethesda.