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Financial Issues This forum is for discussing any of the financial issues involved in your divorce.

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Old 10-21-2010, 08:13 PM
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Default "Notional" Real Estate Commission on Equalization Payment?

Hello ! New here..just have question. My ex is going to buy me out of our matrimonial home , or "is purchasing my rights, titles and interest in the matrimonial home". She has assessed our home (low balled in my opinion, based on current MLS)..but I would like to have my own agent assess as well. Her lawyers' proposal to me reads " value of home is X , less 5% "notional" real estate commission.." , ??? we are not selling..is she allowed to do this? take 5% in "notional" real estate commission, if we are not selling? basically, I am losing this amount to be equalized. Any help would be appreciated!
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Old 10-21-2010, 08:32 PM
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The only fair way is to get a proper home appraisal done by an accredited home appraisor. If you both can agree, then maybe you can split the cost. If not it still would be worth it just having a piece of mind of the "TRUE" value for yourself.
Of course she's low balled it, she wants to buy you out and will come up with whatever she can to lower the amount. You know she wants to buy you out, she will probably try a number of different tactics to get you to agree to the lower number (I know, Im currently in the same situation)

Just a regular real estate agent is not qualified especially in your situation and the fact that the ex has already said she wants to buy you out. and don't think it will hold up much in court. They can give you more just a number that only represents really what else is in the area for sale and taking into account the current market.
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Old 10-21-2010, 08:46 PM
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thanks tugofwar - indeed she has already said "oh well you can use what I am asking for spousal and take it off the house" (obviously lawyer advised her of this) I am not prepared to do this. We had verbally agreed on the "house" but then this 5% real estate thing was a devious move. Also, I wondering why is she going for spousal ? I am paying her table child support, in proportion to income for section 7 and I want her to be able to stay in the house for my children's sake - but then she goes and tell me "my lawyer says I am entitled to spousal" . She worked before during and after our separation. She has a good job, and is self sustaining . We were married almost 7 years - would a judge really order spousal on top of all the other stuff??
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Old 10-21-2010, 09:29 PM
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You're mixing in CS and SS issues with your question. Those issues stand on their own. Don't let yourself or your spouse try and muddy the waters.

Totallly agree with Tug on the value of the home. Get an accredited appraiser to do his/her job. Real estate agent's opinions don't cut it in the court.

As for the real estate commission, I went around the room on this point as well, from the other side. I bought out my spouse and wanted to charge 5% (plus GST, now HST) as a cost of selling.

The argument is that your spouse will eventually sell the house anyway and incur that fee, so while it isn't currently due, it will be ultimately payable. On the other hand it may be decades before the house is sold, so some reduction to the rate would be in order to reflect the time value of money.

Long story short after a fair degree of research and consultation, my belief is that 2.5% is a fair number upon which to saw off this issue. I believe if you look up caselaw you will find that is pretty standard.
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Old 10-21-2010, 09:51 PM
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thanks for the info dadtotheend, I was thinking about the 2.5% offer as well, to show that I am trying to work with the agreement. But I was shocked about the 5% as ex did not mention this at all...nor the request for spousal support. We had verbally agreed on most issues, but I see her lawyer has "enlightened" her and now she is running with that. Thus far, I am self represented, but I may contact a lawyer for the "final" overview before agreeing to anything. Thank you for your advice.
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Old 10-21-2010, 10:16 PM
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Quote:
Originally Posted by dadtotheend View Post
As for the real estate commission, I went around the room on this point as well, from the other side. I bought out my spouse and wanted to charge 5% (plus GST, now HST) as a cost of selling.

The argument is that your spouse will eventually sell the house anyway and incur that fee, so while it isn't currently due, it will be ultimately payable. On the other hand it may be decades before the house is sold, so some reduction to the rate would be in order to reflect the time value of money.

Long story short after a fair degree of research and consultation, my belief is that 2.5% is a fair number upon which to saw off this issue. I believe if you look up caselaw you will find that is pretty standard.
I dont agree with the charge. I think the person staying in the house greatly benefits more than the person who basically has to start all over. It's not your problem when and whenever they decide to sell. They have decided to stay and buy you out.

I will be in a great disadvantage. I will have to start all over. I left him in the house alone. I have a child and took her with me. I just think it's unfair that's all and I think it's just a way to grasp at more straws to lower the equalization

And what happens when they are going to sell the house and the house value is even higher, the other party doesn't get a cut from that gain...

There's too many variables that could happen in the future so I can't see how seeking cost for real estate commission now should come into effect.

And 5% is off the total before equalization right? Not just 5% off your equalization?

Last edited by tugofwar; 10-21-2010 at 10:32 PM.
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Old 10-21-2010, 10:40 PM
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5% is off of the total "value" of the home, then they minus the mortgage owing and LOC owing, then the division was made . I want her to take out this notional fee all together if possible, since we never discussed it and obviously it was the lawyers doing. Also, she tried to add that I am to pay all legal fees/ real estate fees for transfer of mortage - but after speaking to a bank rep, she advised me that if ex maintained or obtained a new mortgage at the same bank, that early discharge fee is waived, therefore no penalty for breaking mortgage.
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Old 10-21-2010, 10:46 PM
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That's if they qualify for getting the higher mortgage to pay you out. It's alittle tougher to get now that you are going to be a single income earner and even harder if you are self employed. Has she already went to see if she qualifies?
If the other party can not afford to buy you out, only other option is to sell
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Old 10-21-2010, 11:18 PM
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Quote:
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And what happens when they are going to sell the house and the house value is even higher, the other party doesn't get a cut from that gain...
The other party gets compensated based on value at separation. Future gains or losses in value accrue to the new owner, the spouse. That is a risk of ownership.

Quote:
Originally Posted by tugofwar View Post
And 5% is off the total before equalization right? Not just 5% off your equalization?
Say house is worth $300K. Real estate commission at 5% is $15K, at 2.5% is $7.5K. Each spouse splits that number.

The real estate commission in that example will cost the spouse b/w $7.5K and $3.75K depending on the rate used.


All this stuff is based on the mixture of everything else, which is itself subject to negotiation.
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Old 10-22-2010, 11:55 AM
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ok...so you pay half the realestate fee's... does that mean they have to pay half the moving expences? Movers are not cheap, nor it is cheap to put up curtains, reconnect everything, etc... and what about the legal fee's for lawyers if you are buying something different??? they don't incur any of those costs...and if they are buying you out in order to stay in the house, that means they are not planning on moving... i can see splitting the fee when the house is to be sold and divided but when one is staying in the house, why does the other have to pay for fee's that are not even relevent at the time? And what about the time off of work to move?
This sounds crazy unfair to me.... then again, there is a lot in the legal system that does not seem just.
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