Renting the Marital Home
Renting the Marital Home
As discussed in our article entitled "Marital Home and Other Real Property," the marital home and other marital real estate are often the most considerable 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 house 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 house and how to refinance the home into that party's name. However, what happens when neither spouse wishes to stay in the home, but the divorcing spouses cannot or are unwilling to sell the house? In cases such as this, renting the marital home to a tenant may be the best solution until the parties can either be able or willing to place the house for sale.
Should you rent, or should you sell?
Is your home currently a liability? Suppose both parties wish to establish residence somewhere other than the marital home post-divorce. In that case, the marital home mortgage will continue to be a substantial liability that one or both parties must shoulder after the divorce. Selling the marital home is, of course, one solution to the concern. However, if the house 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 house and relieve the mortgage burden.
Additionally, renting out the marital home allows both parties the opportunity to sell the house once housing values rise. Still, it will also leave open the possibility of one of the parties returning 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 is that if the house is co-owned by both spouses, both former spouses will be co-landlords of the property upon divorce. If the former spouses effectively communicate with each other and work 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 an independent third party's involvement 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 between 8 and 12% of the monthly rent and 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 to place your marital home on the rental 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, it is best to ensure that any Georgia property management company you consider is professional and trustworthy.