How to avoid a real estate tug-of-war if you’re headed for divorce court

A house (civilly) divided
A house (civilly) divided

From Luxury Listings NYC: Divorce can be messy, especially when the couple can’t agree on how to divvy up their valuables  —  the kids, the cars and, most definitely, the house.

And now with gains made on the same-sex marriage front, more and more Americans are grappling with how to avoid a real estate tug-of-war if they split. Nationwide, half of all unions end up broken, though fewer than one in 10 couples in the city go their separate ways.

Within a year or so after taking their vows, most young marrieds buy their first home. They have a baby, and they sell their starter apartment because they need an extra bedroom. Then, they fix up the second place, too.

The scenario is one that has played out literally millions of times  —  and has turned out just fine. But even though happily-ever-afters insist that they’ll never part, lawyers know better  —  and suggest a few simple things that both spouses should do to protect their interests:

The prenup

Hip-hop artist Kanye West proclaims “We want prenup” in his hit “Golddigger” single, but a premarital agreement isn’t just for the rich and famous anymore.

Both divorce and real estate attorneys generally agree that a prenup is a good thing to sign before getting a marriage license  —  and couples are taking their advice. From 2005 to 2010, for example, nearly three-quarters of the 1,500-member American Academy of Matrimonial Lawyers saw a jump in the contracts. Academy president Alton Abramowitz has seen the number climb to as many as four clients a month, up from one or two a year in the 1970s.

“You’ve got to plan for the worst,” explained celebrity divorce lawyer Raoul Lionel Felder, whose clients have included former mayor Rudy Giuliani (from TV personality Donna Hanover) and concert promoter David Gest (from Oscar winner Liza Minnelli).

A prenup protects each spouse’s assets, laying out what stays separate property  —  Grandma’s china, for example, or that IBM stock from Dad  —  and establishing the rules for asset division if the marriage dissolves.

“I yell very few times,” said real estate attorney Adam Leitman Bailey. “But when they’re not signing a prenup and they’re not worried about it because they’re going to be together forever, I start yelling.”

A paper trail

Prenup or not, every couple should keep detailed financials about their home  —  how much each contributed to the down payment, who picked up the tab for the new floors or the refrigerator, and so forth, advises Jessica Leonard, a divorce attorney at Berkman Bottger Newman & Rodd.

Then, after all the work is done, the pair should find out the value of their home, said Malcolm Taub, a divorce lawyer at Davidoff Hutcher & Citron. A real estate broker can give a good ballpark figure for free; an assessment by a licensed appraiser generally costs a few hundred dollars.

If Splitsville is in the cards, the records and the appraisal usually speed up the settlement. The appraisal will already be done and the records prove which spouse paid for what.

For sale

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For the couple who finds their marriage beyond repair, their first priority  —  obviously  —  is to get away from each other. Often, both spouses want the house  —  an impossibility without living together.

The reasons for wanting the apartment are both financial and emotional, according to Carol Butler, a psychotherapist and divorce mediator.

“They both feel it’s their home and neither one wants to leave,” said Butler, who wrote “The Divorce Mediation Answer Book.” It’s “also because so much money or value is tied up in the home that it must be sold if both people are going to be able to afford separate residences.”

Trying to make the negotiations less painful, Butler asks both spouses to really be honest about why they don’t want to move and what it would take get them to leave. Sometimes they can reach a compromise, sometimes they can’t.

With so many memories tied to their home, Butler said, a couple often decides the better choice is to sell.

“A new place can be positive, a new start, an opportunity to express themselves in a way that might have been curtailed by the former spouse’s taste.”

There are times, though, when only one spouse wants the apartment. It can make the divorce go smoother  —  if the partner has the cash or financing for a “buyout,” Leonard said. Or it can make life living hell for both parties if they can’t agree on a price. If both partners just want out, they need a broker who is clearly not going to take sides, advises Jeremy Stein, a senior vice president at Sotheby’s International Realty.

“Hire somebody to sell it and sell it,” he said.

Neutrality is essential to getting the best deal, Stein said. So is staying tight-lipped because buyers often think they’re going to get a bargain if they know the sellers are breaking up, said Douglas Elliman broker Frances Katzen.

During an open house, many buyers look for clues to why a home is on the market, she said. A common one: half-empty closets, especially in the master bedroom.

“People are really interested in other people’s business,” Katzen said. They want to get a sense of who the owners are  —  their interests and tastes  —  but “they also want to know the motivation” behind the sale.

Katzen’s best advice to everyone involved  —  sellers and brokers: Keep quiet. And to buyers, she cautions that “divorce” doesn’t always mean “steal.” The price depends on how much money the sellers have and how quickly they want to unload their property.

“If it’s a wealthy couple,” she said, “it doesn’t necessarily mean it’s going to be a fire sale.”

When the house is sold  —  and it will be  —  Stein and Butler have the same advice for the divorced couple:

Both point out the strong emotional ties to a house  —  much deeper often than other assets, but the no-longer-dynamic duo needs to move on.

“Ultimately,” Stein said, “you have to let go of the asset.”