Buying, Selling or Refinancing a Home After a Marital Breakdown - Why a Separation Agreement is Important
Buying, Selling or Refinancing a Home After a Marital Breakdown - Why a Separation Agreement is Important
Buying or selling a home is usually an exciting prospect but doing either during a separation or divorce can be frightening. Almost every separation or divorce involves some sort of real estate transaction whether it be a buy-out, the sale of the matrimonial home or financing the sale of a new home. Entering into a separation agreement can make the process easier and less stressful.
A separation agreement tells the story of how a couple has decided to uncouple from their marriage. Separation agreements are important. Not only are they legally enforceable once they’re properly completed and signed, but they’re also a functional tool that allows you to move on from your marriage and into the rest of your life. Areas that are commonly covered in separation agreements include how the couple plan to parent their children into the future, what payments to make to each other and for the children as well as how all marital assets are divided.
How do you use a separation agreement to make the sale, purchase or refinancing of your house easier? If you’re buying and/or financing the purchase of a home, you need to prove your income to your lender. A separation agreement will outline whether you are receiving or paying child or spousal support. If you’re paying support, the amount you pay will be added to your liabilities and you will qualify for a mortgage based on your income minus the amount of monthly obligations (liabilities). The reverse is true if you are receiving support and the support payments you receive are added to your income. A separation agreement helps you prove your income to the lender. We are aware of many situations in which a lender asks to see a separation agreement before approving a mortgage for this reason.
If you are selling your home, your real estate lawyer will likely be asking to see a separation agreement as well. Why? Because the separation agreement outlines how marital assets will be divided and for most of us, the matrimonial home is our biggest asset. When you sell your home, the proceeds of the sale of the home will go into your lawyer’s trust account and before they distribute the funds to you, they will want to see a separation agreement outlining how the proceeds should be split. This gives the lawyer confidence that they have divided the proceeds of the sale the right way.
A thorough and well drafted separation agreement is a tool that will smooth the way for you to buy, sell or finance a home when separated. Be aware that many lenders, and many lawyers, are refusing to accept or give advice on separation agreements downloaded from the internet. You should have your agreement drafted by a reputable and trusted source. Fairway Divorce Solutions has helped many thousands of couples across Canada enter into separation agreements and we’re happy to show you how we can help you move through separation and into your new homes and new lives.
Michael Sondermann is the co-owner of Fairway Divorce Solutions, Calgary SW located at 502, 10333 Southport Road SW in Calgary. He can be reached via email at msondermann@fairwaysolutions.com or telephone at 587-350-7991.