Sell your home for right reasons
MAIN IMAGE: Roxanne Benater of Benater Attorneys
Selling property is what estate agents live for. This is what they are trained to do, why they spend hours and hours canvassing potential buyers, drive hundreds of kilometres to convince a client to buy a house and do that day in and day out. But they must assist buyers, and sellers, to take this step for the right reasons.
“It is clear that when a homeowner is selling their home it must be for the right reasons and when it is best for the seller. It must be sold lawfully, not in an attempt to defraud or conceal either money or defects, and must be in their best interests, as well as those of the spouse and/or creditors,”says Roxanne Benater of Benaters.
“The big question on everyone’s minds is when is the most favourable time to sell? There is no clear-cut answer to this question, but there are some factors that play an important role.
“One of the first factors to take into account is market conditions. When a country’s economy takes a knock, a consumer’s buying power is affected. And when the demand for property drops, sellers have no option but to lower asking prices. Interest rates should always be taken into account when thinking about the best time to sell your home. Interest rates greatly affect people’s ability to buy property.
“Keep in mind that a low-interest rate will bring down the costs to obtain a home loan and create a higher demand for property,”Benater explains.
While the sentiment here may not always be a good one, the question often comes up – should I sell the house before or after my divorce?
The distribution of assets during a divorce is never a comfortable topic but needs to be addressed. For all intents and purposes, the distribution of assets should be kept fair, especially when choosing who should keep the family home, in the event that the home is not sold for the purpose of equal distribution of profit.
A guiding light is the marriage contract, which will pave the way for the proceedings of a divorce and determine asset distribution. How the couple was married is an important consideration.
Benater says getting married in community of property is the most affordable and most common marital regime.
“If couples do not enter into an ante nuptial contract before marriage, they are automatically married in community of property. In this situation, the couple’s estate is owned jointly in equal shares.
“The assets of the joint estate should therefore be divided equally between the parties at the time of divorce – a rule that applies to all assets as well as to the marital home. It doesn’t matter whose name the house is in or whether the house was purchased before or after the marriage. The immovable asset is part of the joint estate and will be divided equally between the parties. This is usually done by putting the house on the market and dividing the profits of the successful sale between the parties.
“But should one of the parties be able to afford to pay the mortgage bond, property taxes and maintenance costs of the home, the property does not necessarily have to be sold. That party could offer to buy the other party out of the house.
“The agreement should also provide for the minimum selling price and, if the minimum selling price can’t be achieved within a determined period of time, one spouse may at his/her election lower the selling price. The agreement should also cater for who will pay for costs related to the sale of the property including bond cancellation costs, compliance certificates and rates figures, “she emphasises.
Married out of community of property?
If the property was purchased by one of the spouses before or during the marriage out of community of property, it is recommend to obtain a copy of the divorce order to ensure that no order was granted affording the other spouse any rights to the property. If the divorce order is silent on the property in question, then such property remains the property of the original and this party acting alone may decide to sell the property. If the property becomes part of the accrual, the situation will mimic that of being married in community of property.
Debt and bankruptcy
A person can declare themselves insolvent or bankrupt and file for sequestration if their debt is too great or unmanageable and their liabilities have exceeded their assets. Sequestration is a legal process whereby creditors can apply for debtors to be declared bankrupt or where the insolvent party applies to court to be declared bankrupt.
According to Benater it is important to remember that the main purpose of sequestration is for the orderly and equitable distribution of the proceeds of the debtor’s assets where all creditors cannot be paid in full. Sequestration is aimed at dividing the debtor’s assets in accordance with a fair pre-determined ranking of creditors (as dictated by the Insolvency Act).
“For an individual’s estate to be sequestrated, it needs to be for the benefit of the creditors. To be beneficial, the insolvent must own assets to satisfy the claims of the creditors. It is at this point questionable whether to sell your home before declaring bankruptcy, because all the movable and immovable property of the debtor before and after the sequestration falls within the insolvent estate.”
“You can protect your assets, through trusts. One of the most important benefits of a trust is that it will help you to separate your assets from your property investment debt, your business interests and other financial risks. Assets owned by a trust do not form part of an insolvent estate.
“The transfer of the property into a trust must be done while still solvent. There are a number of sections in the Insolvency Act that allow a trustee of an insolvent estate to claw back assets into the insolvent estate.
“If assets were transferred to the trust while the estate was solvent, it is difficult for creditors to set aside the trust’s actions.”
The question about fixing problems in the house before selling, involves a number of points – the market condition, the reason for selling and how urgent do you need to sell your property?
“One important aspect here is you are not allowed to conceal any issues with the property, even though the home is sold voetstoots “without any warranty”. If a potential buyer asks if there are any defects in the home, the owner and the estate agent are obliged to divulge any issues or defects,” Benater concluded.
Article sourced from Benaters.