Why you should avoid a partition auction in a divorce

"What will happen to the shared property?" This question plagues many couples going through a divorce who jointly own a home. Will one partner remain living there? Can they buy out their ex-partner and manage the mortgage payments alone? Should the property be sold or rented out? If no solution is found, a forced sale by auction looms. Read on to find out why you should avoid this.

Divorce experts advise finding a solution for the shared property early on. A joint decision should be reached no later than after the separation year. If it's already clear during the separation year that reconciliation is impossible, the property can be sold then. This not only makes it easier to draw a line under the past but can also provide seed capital for a fresh start.

Get professional advice

If one ex-partner wants to sell the property while the other wishes to remain living there, the former can apply for a partition auction at the local court if no agreement can be reached. A mediator can facilitate communication between the two parties. A reputable local real estate agent can also advise the ex-partners on finding a solution for the property. They are not only familiar with such situations but also well-versed in current market trends and know what options are available.

A seemingly good solution

The purpose of a partition auction is to prevent such an unresolved case from remaining indefinitely unresolved. Assets that are difficult to divide, such as real estate, are to be converted into more easily divisible assets, such as cash. Often, one party considers this a sensible way to finally force a resolution. However, many divorcing couples are often unaware that a partition auction can lead to financial losses. This is because, not infrequently, real estate is sold below market value.

Property as a bargain

Partition auctions are popular with bargain hunters. They are informed about the market value and know how high they can bid. Even the ex-partner who wants to remain in the property can bid. However, they risk being outbid or having another bidder drive up the price. It's a risky proposition for both parties.

It's best to seek professional advice from the outset to find a solution for the shared property. Professional real estate agents know when joint rental is worthwhile, allowing the rental income to pay off the loan, or when selling makes sense. For both parties, professional advice has the advantage of avoiding any financial losses.

Are you on the verge of divorce and unsure what should happen to your shared property? Contact us! We'd be happy to advise you.

Notes

For the sake of readability, this text uses the generic masculine form. Female and other gender identities are explicitly included where relevant to the statement.

Legal notice: This article does not constitute tax or legal advice for any specific case. Please consult a lawyer and/or tax advisor to clarify the facts of your individual situation.

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