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Renting the Marital Home
As discussed in our articled entitled “Marital Home and Other Real Property,” the marital home and other marital real estate are often the largest marital assets and marital debts that a couple must divide upon divorce. Decisions must be made concerning whether the marital home will be retained or sold. If the home is to be sold, determinations must be made regarding how much to ask for, how long to keep the home on the market and who will be chosen as the real estate agent. Conversely if the home is to be retained, decisions must be made regarding which party will remain in the home and how to refinance the home into that party’s name. However, what happens in situations where neither spouse wishes to remain in the home, but the divorcing spouses are not able to or are unwilling to sell the home? In situations such as this, renting the marital home to a tenant may be the best solution until the parties are either able or willing to place the home for sell.
Should you rent or should you sell?
Is your home currently a liability? If both parties wish to establish residence somewhere other than the marital home post-divorce, the mortgage on the marital home will continue to be an extremely large liability that must be shouldered by one or both of the parties after the divorce. Selling the marital home is of course one solution to the concern. However, if the home is underwater, selling in the immediate future may not be an option. Renting out the marital home in the interim, until the housing market recovers is a way to retain the home but also a way to relieve the burden of the mortgage. Additionally, not only will renting out the marital home allow both parties the opportunity to sell the home once housing values rise, it will also leave open the possibility of one of the parties retuning to live in the home should circumstances change. Finally, there are tax advantages that come with converting a marital residence into a rental. The owner may still take advantage of the mortgage interest deduction while also deducting things like maintenance costs, depreciation, utilities and insurance.
Should you hire a property manager?
The decision to rent out a marital home during divorce or post-divorce is one that can prove to be very beneficial to both parties. However, practically speaking, renting out a home also comes with additional responsibilities and complications. The first being that if the home is co-owned by both spouses, upon divorce, both former spouses will be co-landlords of the property. If the former spouses are effective in communicating with each other and working well with each other, this may not pose a problem. But if not, renting out the marital home may prove to be extremely difficult. Second, who will handle the day to day affairs associated with managing a rental property, such as collecting rent payments, physically maintaining the property, and addressing tenement concerns? If neither party is willing or capable of taking on the tasks associated with being a landlord, and if the involvement of an independent third party would ease the friction that may be caused by two former spouses acting as co-landlords, hiring a property manager or property management company may be advisable.
Generally, a property manager will charge anywhere between 8 and 12% of the monthly rent plus 50% of the first month’s rent when a new tenant moves in. Additionally, some property management companies may also charge an initial account set up fee when an owner initially engages their services. Typically, property managers handle all aspects of renting out the property, such as:
- Advertising for new tenants;
- Investigating and advising the owner concerning the best rental amount;
- Performing tenant screenings;
- Signing Leases;
- Collecting the rent;
- Keeping track of finances;
- Scheduling maintenance repairs;
- Issuing legal notices; and
- Filing and prosecuting evictions
Although engaging a property manager or property management company is not necessary in order to place your marital home on the renal market, many seek to take advantage of this option due to the convenience of having a third party handle the day to day tasks of managing the property. As with choosing any other service provider though, it is best to ensure that any Georgia property management company you consider is professional and trustworthy.