During the early days of the mortgage business, brokers would require a lot of paperwork…
Can my spouse sell our home without my permission? What if only one spouse owns the house? What is the spousal buyout program? These are some most common questions I see everywhere.
Know the fact that whether the house is owned by both or only one, the house cannot be sold by one partner without the consent of the other.
So, what if the marriage or another significant relationship ends between the two partners? What will happen to a home or secondary property? In such situations, where two parties on the title of a property are in the process of a legal separation, you may be able to keep your home and avoid moving to help maintain some stability in an otherwise turbulent time.
This is possible under the Spousal Buyout Program.
What is the Spousal Buyout Program?
The Spousal Buyout Program falls under the mortgage Purchase rules. These rules allow you to finance up to 95 percent of your home’s value while paying your ex-spouse or partner their portion of the home’s equity.
In simple words, if you are going through the process of terminating a marriage, a spousal buyout might be required. It is a financial obligation and your partner will want to ensure that it is properly handled before anyone of you leaves the house.
Before delving into the process of applying to the spousal buyout program, make sure there is no chance of a reunion. If there is, then there is no need for to division of assets just yet. Spousal Buyout Program is a long and gruesome process and might consume your time and resources. So, it is important to ensure your decision is finalized and you both need to step away.
If you have already decided to separate ways, then you may face several options under the spousal buyout category. So, let’s explore each to find out how you can negotiate a successful spousal buyout program.
How to Get a Spousal Buyout Program?
In order to get a successful spousal buyout program, make sure you follow the below-mentioned steps.
Step # 1 Get Your Separation Agreement
A separation agreement is nothing but an agreement between you and your spouse outlining the financial obligations and handling of assets. It also includes things like who will get custody of children (if there is any), child support, and spousal support if the relationship is going to end. This agreement is important because if there is no signed separation agreement, the partners are not legally separated.
It is important to mention here the fact that separation is altogether different from a divorce. A separation should always come before the divorce and a legal agreement is also required before a buyout occurs.
Step # 2 Check If Anyone Of You Wants To Keep The House
If you both do not want to live in the house, then there is no need for a buyout. In such a case, you sell the house and divide the money with an equal share. However, if one party wants to purchase the house and does not want to leave it, then the process becomes intricate and the possibility of buyout comes into play.
Step # 3 Make Sure To Fulfil The Following Documents And Criteria
- You must have a good credit score
- You must be able to afford the mortgage on your income alone
- The application should be submitted as a purchase loan up to 95 percent LTV
- Both parties must agree to the legal separation
- The separation agreement is dully agreed and finalized
- The offer of purchase is made by the spouse
- Since this purchase transaction is non-arm’s length, a full internal appraisal is required
Step # 4 Think Logically And Do Not Lose Control
Ending a relationship may be a very difficult choice for you and you may get supercharged, but remember this is the time to be most logical and calm. Try to get this process done as quickly as possible and handle the financial obligations so you can move on from the relationship.
Also Read: Personal Loans In Canada
Talk to your partner calmly about the division of assets and ask for the necessary separation agreement and moving forward. Remember, this is a situation that you need to handle before your relationship is terminated.
Things To Consider When You Apply For Spousal Buyout Program
- Separate legal representation is required for all parties. The same solicitor closing for both vendor and purchaser is not acceptable.
- The home or property cannot be placed on rent
- If the buyout is to happen, an offer of purchase from one party or spouse should be made to the other
- If not ordered by the insurer, the full appraisal will be required
- The current mortgage statement will be required to confirm balance owning
- A finalized legal separation agreement will be needed to clearly state the amount of the buyout
- For an Equity buyout (not married or common law), the confirmation of the amount of the buyout will be required as well
Most importantly, everything should be written into the agreement of purchase and sale.
Fixing The Value Of House
Now, you might be wondering if there is a buyout, then someone must fix the value of the home. Who is going to determine the value of the home?
Well, there won’t be any real estate agent involved in the buyout. If you have recently appraised your house, you are your spouse can begin with the value you know. However, if you and your spouse do not know the value and cannot agree on one amount, you can take the help of a real estate agent in this case.
You May Also Like: Struggling with your mortgage payments? Here is what to do
The real estate agent will check the sales prices in your neighborhood and will estimate the cost of your house. However, the most accurate and right way to do this is to hire a real estate appraiser for this.
If you disagree with the house value, it is a good way to settle the question for you. If the appraiser does not work out well for you too, then your last and decisive option will be the court. The judge will likely settle your matter and you will move on to sell your house.
The Bottom Line
Know that the ending of a relationship is not a pleasant thing at all. Your emotions get very high and you make decisions that deserve regret later. So, try consciously to stay as logical and get over this situation as soon as possible. The deeper you get into a relationship, the longer it will take to get out, especially when financial considerations are involved.
If you need a helping hand in this tiresome situation, you can always reach out to us. We will handle everything from preparing a legal agreement to valuing your home in a very short period. Remember, this situation is temporary and you have to handle it faster.