What Happens to Your Home in Divorces

Divorce is a difficult situation which opens up many emotional and financial issues which need to be resolved. One of the most important issues is what to do about your home. There are many questions you might be asking at this time, we, at Kahane Law Office, are here to help. Let’s first break down some of the basics.

“I think I want to stay in my home…what do I need to keep in mind?”

First, take into consideration the size of the home, utilities, payments and family needs. Will the familiar surroundings bring you comfort and emotional security, or unpleasant memories? Do you want to minimize change by staying where you are, or sell your home and move to a new place that offers a fresh start? Does staying in the home truly make sense? You will likely now be entirely responsible for the house payment, taxes, insurance, upkeep, maintenance and other related bills. Your household income may be decreasing, and your overall expenses may be increasing if you are subject to a court order for spousal or child support. It is important that you are aware and thorough in determining what your actual expenses will be in keeping and maintaining the home on your own.

“My spouse is entitled to share in the equity we have in our home…how is this handled?”

The equity in the home needs to be determined by an appraiser – call us if you need a recommendation and referral. The appraised value less the eventual costs of selling (commissions and seller closing costs), less any joint financial obligations related to the property (mortgages, secured credit lines) equals the equity to be split between the parties (in most cases). Any money you or your spouse contributed to the home from your own pre-marital assets must also be accounted for in determining the final division of equity.

If you choose to stay in the home, when it comes to mortgage financing, you have two options to pay your ex-spouse. You can either refinance your current home to get cash out, or you can obtain a new second mortgage or home equity loan. This is where you will want the advice of a trusted licensed mortgage professional.

Even though you may now be qualifying for the loan without a spouse’s income – with your own good credit and income, you can usually qualify on your own. Often, child support and alimony is viewed as stable income and can, in most cases, be used to help support the mortgage application.

“What if I am the one leaving the home?”

It is important to know that even though the divorce agreement awarded the home to your spouse, you are still obligated for this debt in the eyes of the mortgage company.

Many people assume that by filing for a divorce and removing themselves from the title, they are no longer responsible for the mortgage. A divorce agreement may only eliminate your name from the title of the property, but not necessarily from the mortgage. This is something to be aware of and we always recommend getting your own legal advice to make sure you are properly protected.

“What if we both decide to sell the home?”

If you and your ex-spouse have made a mutual decision to sell your current home, it is important to work together with a good real estate professional to maximize your return. Differences aside, you should both be present when a listing contract is put together and both be consulted on all potential offers. Consult a qualified real estate agent.

“If I want to buy another home – am I going to be out of luck while I am still listed on the old mortgage?”

Consult with your lawyer as to whether or not it is advisable to purchase a new home before your divorce is final. Contact us and we can identify any issues to resolve that might slow the process. Remember that in most situations, child support and alimony can be used to support the mortgage application but must be properly documented. Even if you are still listed as a co-borrower on the mortgage for the prior home, if the divorce agreement states that you are not obligated for the mortgage, many mortgage programs will allow you to be qualified without this obligation. However, every situation is different and it is best to give us a call to discuss your circumstances prior to making any purchases.

“What if I do want to purchase another home before the divorce is final?”

Get advise you can trust. Discuss the potential pitfalls with your lawyer. Your spouse may present an obstacle to this process if the details of the divorce have not been finalized. Without the final divorce agreement (or at least a signed separation agreement), many lenders are reluctant to proceed. With prudent planning, we can work together to manage the challenges presented and hopefully make the process as painless as possible.

The best advise we have is that you consult a licensed professional for your real estate, mortgage and legal needs.

For more information contact Jeff Kahane at Kahane Law Office or 403-225-8810.

World Record Set For Building A House….

This is crazy… You gotta check it out!

This was a record set by Habitat For Humanity.  They built a 3 bedroom bungalow in under 3 and a half hours…

Are You Affected By The Recession?

We want to know if you are finding that you are affected by the recession?

We will run this poll for a week and then post the results for all to see…

RRSP’s and First Time Buyers

Q. Over the past four years, my wife and I have contributed to our RRSPs. Soon, we plan to purchase our first home. Is this a good time to buy or should we wait another year or two?  Can we withdraw the maximum $20,000 under the Home Buyer’s Plan?
– Sondeep

A. The Canadian real estate market continues to show sale and price declines.  Although most experts do not expect a U.S.-style meltdown, a significant price reduction is expected. Regardless of which  province in that you live, real estate agents advise sellers “realistic pricing is key to selling your home.”  If you plan to live in the home, real estate will always be a good investment.

See Latest Calgary Market Update Here

Our federal and provincial government has made several initiatives to stimulate the economy and the housing sector. Many recent changes in the federal budget are excellent incentives for all homeowners and first-time buyers.

First-Time Home Buyers:
• New-increase!  The RRSP Home Buyers Plan withdrawal limits per individual have increased to $25,000 from $20,000, effective Jan. 27, 2009.

• New-tax credit!  After Jan.  27, 2009, homebuyers that have not owned a home in the current year or four preceding years may qualify for a $5,000 non-refundable tax credit.

Existing Homeowners:
• New-Renovations! Families that undertake renovations or alterations between Jan. 27, 2009 and Feb. 1, 2010 to their principal residence may qualify for a 15 per cent non-refundable tax credit. Cost of renovations must be greater than $1,000 and up to $10,000.

These are giveaways, check with your tax adviser/accountant.

Original Article Here by- Henry Choo Chong

New FINTRAC Rules for Real Estate Developers

On February 20, 2009, an amendment to regulations under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, 2000, c.17 (the “Act”) comes into force. This change now includes “real estate developers” as part of the group of financial service providers and financial intermediaries that must meet the reporting and record-keeping requirements described in the Act.

When a real estate developer sells a new building, which includes houses and condos, they must comply with the specific requirements under two regulations under the Act (the “Regulations”):

1. Under the Regulations, they must report ‘suspicious transactions’ to FINTRAC. ‘Suspicious transactions’ are transactions that are in progress or have been completed in which there are reasonable grounds to suspect that that money involved in the transaction stems from a money laundering offense, which can include a terrorist activity financing.

2. Under the Regulations, the developer must:
• Maintain a ‘receipt of funds record’ for funds received in the course of a transaction (subject to certain exceptions);
• Maintain a ‘client information record’ for every client;
• Follow specific procedures for determining the identity of every person who conducts the transaction and every corporation (including the names of their directors);
• Submit a ‘large cash transaction report’ to FINTRAC when the developer or its solicitor receives $10,000 or more in cash; and
• Report any transactions involving known terrorists or terrorist property.

FINTRAC has the authority to make inquiries into the real estate developer’s business and obtain documents or other information from the developer’s records for compliance purposes. The consequences of not complying with the requirement to report to FINTRAC involve criminal penalties and, depending on the offense, could result in a fine, imprisonment, or both. The maximum financial penalty amount that can be imposed for violations classified as very serious is, in the case of an entity, $500,000 and in the case of a person, $100,000.

If you have questions contact Jeff Kahane at  Ask Gurus, or www.kahanelaw.com

Kahane Law First Blog Post

Kahane Law office is excited to be part of www.thecalgaryrealestateblog.com team. Jumping into this world of blogging I thought the following would be an appropriate first quote/post.

“Computers have enabled people to make more mistakes faster than almost any invention in history, with the possible exception of tequila and hand guns.”

-Mitch Ratcliffe

We will aim for a higher standard! Please check back for our law related posts.

Jeff Kahane (www.kahanelaw.com)

Weekly Market Update – February 3, 2009

Can you believe it… January is already over… Anywho!

Over the past week, the listing count in Calgary has decreased.  This is a good thing, especially when it is mixed with the number of sales increasing.  The median prices for both condos and single family homes have stayed roughly the same as last week with condos at $248,000 (up $1,000) and single family at $377,500.  As well the average days on market have decreased and both condos and single family are sitting at 62 days on market.  With the prices staying where they are at, some would say that the market is starting to stabilize.  I do hope that this is the case, but we will need to have more than a couple weeks of data to see this.  If prices remain the same into the end of February time frame, the tides may have calmed.  We will have to wait and see.

Same as last week, many of the places that buyers are seeing are not quality listings, that do not show well.  This is one area that we try to stand out from the crowd in, and when buyers look at our listings we get many comments that the home viewed was in impeccable condition.

If you are considering buying in Calgary, right now is a great time to buy, as there are some highly motivated sellers out there.  But on the flip side, if you are needing to sell, you need to market your home a certain way, and price it properly, or it could cost you more in the long run.

Thanks for checking out our blog, and we hope that you find it informative and helpful in your real estate adventures.

Demolitioning Derelict Homes in Calgary

The Calgary Herald reported today that they may pass a law that homes that are derelict and have a number of complaints from neighbors, can end up being billed for demolition on their homes.

Owners who don’t comply within 14 to 30 days would then be issued a notice of city demolition, for which they would be billed.

Bruce already has his eye on five Calgary properties that have had numerous complaints by area residents for various infractions such as unsightliness, vagrants breaking in to sleep, vandalism and drug use.

“Citizens don’t want to live next to that and shouldn’t have to live next to that,” said Bruce.

“We’re talking about properties owned by numbered companies where the investors don’t even live in the country,” said Bruce. “We can’t ticket them because it doesn’t do anything, but an order can be executed and the cost can be put on the property tax roll.”

Southeast Calgary resident Mary Anderson welcomed news of the new bylaw action targeting rundown homes.

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