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  • Need help fast! Offer to Settle today...

    Hi all, just preparing the draft Offer to Settle and meeting with the lawyer in a few hours so I'm stumped on one thing and really looking for some quick guidance.

    For the Matrimionial home I'm putting in a option for her to buy the house from me.

    I guess I'm suppose to say that my proceeds will be 50% of the price minus commission, land transfer, HST, etc.

    But not sure this is the best thing for me since she is not actually selling the house so will not incur these costs until she ACTUALLY sells who knows when.

    So if the house is say worth $500K, minus 5% commission, costs, etc. That makes the net proceeds $475K and I would get half that???

    But then for me to buy another place I would incur closing costs, moving costs, etc. That would be 100% covered by me???

    Just not sure if this is how it works since I think I would be getting screwed. Bearing 50% of unrealized disposition costs and then having to bear 100% of costs to purchase my own place??

    Can someone please help clarify that this is how it works? Or is there a better way to phrase in the offer so I'm not getting the short end of the stick?

    Thank you all in advance and look forward to some quick replies / thoughts from the group!

  • #2
    Originally posted by Dee1973 View Post
    For the Matrimionial home I'm putting in a option for her to buy the house from me.

    I guess I'm suppose to say that my proceeds will be 50% of the price minus commission, land transfer, HST, etc.

    But not sure this is the best thing for me since she is not actually selling the house so will not incur these costs until she ACTUALLY sells who knows when.
    If the asset was to be sold, it would generate the value minus the commission in value. You are entitled to half of that value.

    Selling a house is a major pain, frankly, you should be happy she is buying it from you.

    But then for me to buy another place I would incur closing costs, moving costs, etc. That would be 100% covered by me???
    Same thing for her when she moves.

    Can someone please help clarify that this is how it works? Or is there a better way to phrase in the offer so I'm not getting the short end of the stick?
    Sure, you could just offer 50% of the commission.

    Comment


    • #3
      Thanks Janus. The thing is she will probably never move for a long time so she's not going to get hit was selling costs anytime soon, but totally understand how it works now.

      I like the thought of just offering 50% of the commission. So price minus 50% commission.

      So maybe you or someone can help with this part too. I am concerned that she will agree to option to buy me out then of course..

      1. We'll never agree on price amongst ourselves because in the past when she wants to buy it's worth dirt and when I want to buy it's the Taj Mahal. I would suspect we would get a joint appraisal, but I would want it to happen fast (we've been in the home together for 15 months now) so should I put something in like "parties agree to obtain a joint appraisal within X days of the acceptance of the offer".

      2. No assuming we come up with an agreed upon price - I don't want to be waiting the rest of my life to get it and would obviously want to start looking for another house. Of course, I can't put in an offer until I am getting my 50%. So for this should I put something in like "party A agrees to provide party B via certfied cheque the payout amount within X days of receipt of the independent appraisal"???

      Comment


      • #4
        I wouldn't calculate the commission into the costs, but should be straight lagal fees. One might argue that the commission costs will be absorbed through increase in equity of the property over time. If the house were to be sold on the market then commission fees would certainly be part of the transaction, else it's a simple change in title documents.

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        • #5
          Just pointing out that if net equity is being split 50/50, as it should be, then the costs should be 50/50, and it doesn't matter what costs you include, if the net check is split 50/50.

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          • #6
            Limer, totally agree - by her keeping the house SHE gets to choose when to sell and incur these actual out of pocket costs. Of course by then it is likely that they would be more then absorbed by increase in equity. The only out of pocket costs truly would be legal fees for simple change in title documents.

            So any thoughts around my other questions:

            1. We'll never agree on price amongst ourselves because in the past when she wants to buy it's worth dirt and when I want to buy it's the Taj Mahal. I would suspect we would get a joint appraisal, but I would want it to happen fast (we've been in the home together for 15 months now) so should I put something in like "parties agree to obtain a joint appraisal within X days of the acceptance of the offer".

            2. No assuming we come up with an agreed upon price - I don't want to be waiting the rest of my life to get it and would obviously want to start looking for another house. Of course, I can't put in an offer until I am getting my 50%. So for this should I put something in like "party A agrees to provide party B via certfied cheque the payout amount within X days of receipt of the independent appraisal"???

            Comment


            • #7
              One of you selects 3 appraisers, and the other one picks one of them within 10 days.
              Both split the cost of appraisal, and agree to go with that price for the house.
              Party A will have 45 days to pay Party B equalization payment following the completion of the report... (house, plus any other assets/debts)

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              • #8
                I bought my ex out. I proposed 3 appraisers, she picked one. I paid for the appraisal out of my pocket. The lawyers deducted 6% from the appraised value of the house for selling costs. I was given 30 days to transfer the house in my name and I paid all the legal fees plus title insurance from my pocket. This is how it works. You try anything else, it is only going to waste time and make lawyers richer.

                The buyer has temporary advantage of keeping the 6% but will eventually have to pay 100% of the 6% at the time of actual sale plus the buyer takes the risk of not being able to sell at the appraised price.

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                • #9
                  Thank you both - very helpful suggestions.

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                  • #10
                    Sorry Kids1st - what timeframe did you have to give the EX her portion of the funds?

                    You only mention that you had 30 days to transfer house title.

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                    • #11
                      30 days from the sign off on the minutes of settlement since the house transfer was part of equalization payment.

                      During the negotiations, I was brutally ripped off. Ex denied several assets that she owned and exaggerated what I owned. She was like, take the deal or take it to the court. (She had a legal aid lawyer). I gave it all away but in reality I think I saved more by not feeding the lawyers. And of course, I got peace of mind that she was NEVER coming back!!

                      Comment


                      • #12
                        One other thing to consider is to perhaps consider an indemnification clause until the mortgage is due in order to avoid or minimize cost of refinancing. You could use this to offset any potential commission costs.

                        You will definitely want an appraisal before signing settlement. You don't want to be ambushed at a potential trial with their side submitting evidence (say from a friendly real estate agent) that would low ball the value.
                        Last edited by limer; 05-31-2013, 08:53 AM.

                        Comment

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