“I Do Not”. What Is Matrimonial Real Estate Appraising?
When going through a divorce or marital breakup, there is often the “matrimonial home to consider. But what about other real estate assets the couple may own jointly? When a couple separates, they must determine what they are going to do with the home they shared when together. A “matrimonial home” is defined as the property that is usually occupied by the couple as their main family residence. Sometimes, there can be more than one matrimonial home, for example, if parties own a home and a cottage.
During a legal separation, you must figure out if you intend to buy out your former spouse and take on the mortgage and home ownership alone. Or will you both agree to sell the home, split the proceeds, and move on? And what is involved for both options?
There are two ways to value the matrimonial home during the process of separation. If you both agree to sell the family home, the value of the home is whatever you can sell it for. You must have a legal or interim separation agreement in place to direct the funds to be split, or your real estate lawyer will hold the sale proceeds in trust until one is finalized.
But, if you decide to buy out your former? spouse or they decide to do so, the value of the home needs to be based on a formal appraisal by a designated appraiser who is well qualified to appraise the property or properties in questions. You should be very selective in hiring the right individual or firm to complete the appraisal work, as sometimes the assets in question are highly specialized, and quite often the appraiser’s expertise will be required beyond just the issuance of an appraisal report.
The following are important to appraise such a property properly and fairly.
- Effective dates. When documenting a marital separation, the legal date of the separation is key in valuing the proceeds of the family net worth, including that of the marital home. It essentially is the date that is agreed upon legally by both parties, formally documented as the date that the spouses legally separated, and there is no reasonable chance that they will resume the relationship or live together again. Often the divorce date, or separation date, differs from the date you order an appraisal. Dates are important as they help clarify, legally, where the proceeds are to be distributed. It is important to get the correct dates from the lawyer or legal team in this situation and ensure the appraiser is clearly valuing the property as of the required date. Often multiple effective dates are requested such as a retrospective date, or date sometime in the past, and a current date.
- The type of property being appraised. The appraiser should be qualified and experienced in valuing assets similar to the subject property. Real estate appraisal is a highly specialized profession and no two properties are the same. Therefore, it is in your best interest to ensure that the appraiser and/or firm has the in-house experience to estimate the market value of your property accurately and provide a strong and defendable report which will subject to extensive scrutiny.
- Scope of work being completed. Does the work entail just a report? Or is it necessary for the appraiser to also review another party’s’ report? Is the report subject to litigation, hearing dates and providing expert witness testimony? Most appraisers charge a flat fee for providing a report but will charge hourly for all other services being requested of them. Often an appraisal report will state that the report is completed on the basis that any testimony or in-court appearance concerning the report, is not required, unless specific arrangements have been made beforehand. Such arrangements could include adequate time to review and report on data, and provisions for compensation.
In any case, in situations where one partner wants to stay and buy out the other, it can become more complicated to value the property. Some of these situations may be where the home was purchased before the marriage, or if the parties have various real estate investments as assets. And often, sentimental value or other family-related reasons for keeping the home come in to play. Therefore, it is vital to have a appraisal completed when going through a divorce/marital separation.