If you and your spouse have a rental property, it’s likely brought you a nice added source of income – but maybe more than a few headaches. Now that you’re divorcing, the question becomes what to do with it. Your options are somewhat similar to those for your family home. However, you likely have less of an emotional attachment to your rental property than a financial one.
For purposes of this discussion, let’s assume it’s marital property. Maybe it’s your first condo that you outgrew and are now renting out. Maybe it’s a lakeside cabin that you rarely use any longer and have turned into a vacation rental.
What are your options?
Basically, your primary options are these:
- You sell it and split the proceeds.
- One of you buys out the other’s share – either to continue to rent out or to live in.
- One of you keeps it and the other one gets one or more assets of similar value.
- You keep it and continue to rent it, dividing the income and expenses.
Whether you do the last of these depends on whether you can continue to work together in a business relationship as landlords. You may want to get a property management company to handle most of the work, but that will eat into your profits.
If you’re going to continue as landlords, put an agreement in place
If you decide to keep the property and continue to rent it, it’s critical that you put an agreement in place to detail not just how expenses and income will be split but things like who will handle repairs, maintenance, tenant issues and more. That’s particularly important if the two of you are going to continue to be hands-on landlords.
If you’re on the fence about how to handle the property, it’s important to review the pros and cons of the various options. Having experienced legal guidance can help you make the best decision for you and help ensure that you get a fair deal in the property settlement.
