February 26, 2024 • 7 mins
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EPISODE DESCRIPTION
In this episode, Tom & Brandon explain the moving pieces you need to know when you're breaking up with a spouse or significant other and you share a home.
What was discussed: → Separation agreements and statutory declarations. → The steps you should take if you're in this situation. → And why sharing a Broker can be extremely beneficial to both parties.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:07):
significant other and you'retrying to figure out what to do
from a mortgage perspective, thisvideo is going to explain exactly
that and go over all of the movingpieces you need to know.
For sure.
So really, it comes down to
breaking up, it's not fun.
No one enjoys to do it.
Unfortunately, when you're marriedor you have kids or you share that
common home that you're investedin, there's a few more pieces that
(00:31):
come into play that make it alittle bit harder than the
traditional breakup where you justgo your separate ways.
So when you have the home orchildren in play, one thing that's
really important, this is like thelast piece that you guys really
need to work out and have aconversation on, is setting up a
separation agreement.
Having that separation agreement,
which outlines what happens withthe equity from the home if it
(00:52):
sells, or if you do a spousal bio,which we'll walk through in a
minute, what happens with thekids, what happens with spousal
support, all of these detailsreally help set the stage for what
happens with spells of support.
All of these details really help
set the stage for what happensnext for your next mortgage as all
lenders are going to ask for this.
There's no way around it.
They will all ask for piece.
So if you're someone that is, say
you're breaking up and you'reselling off your home and you want
(01:13):
to buy another home, do you need aseparation agreement for all
situations or just that one?So speaking, you do need the
separation agreement.
If a home or children are in play,
they're going to ask for aseparation agreement.
There are unique cases where youcan get what's called a statutory
declaration.
And this is done at your lawyer's
office prior to closing thatbasically says, you know, we can't
(01:34):
get a traditional separationagreement.
The terms are this, and itoutlines kind of everything and
you're signing agreeing to that.
Cases of that happening are
usually like one partner totallyfucks off and leaves the other
partner, or there's like an abusesituation with the kids or
something like that, and thepartner has to flee.
So there are cases where, youknow, like someone uses the
(01:56):
separation agreement kind of asemotional abusive situation and
doesn't sign it that we can use astatutory declaration, but there
needs to be a really good reasonfor it.
And those are a few examples thereof what that could And that's why
you got to work with a good teamon the mortgage side.
Like you got to have someonethat's going to vouch for you and
your story, because at the end ofthe day, yes, there's a lot of
(02:19):
systems and automations on theback end in the mortgage industry.
But the human aspect of it is theunderwriter that is going through
that file.
So your file, they're going to
look at the story and see if itmakes sense.
And if it doesn't make sense toask and request that statutory
declaration, then chances are thelender's not going to accept that.
So it really is crucial.
There is a story that actually
makes sense to the lender's eyes.
For And there's certain pieces
that like, obviously having thatstory, you want to back it up with
(02:42):
documents.
At the end of the day, having
documentation helps in ourindustry.
So if you have something from likethe family courts, or you have
things that show that you've triedto have this conversation to get
the separation agreement just notworking, then that's kind of what
you would use to support your caseto the lender.
So go back to the first step.
If you're someone that's going
through this situation, Brandon,like what is the first thing
(03:02):
someone needs to know?So once you know that agreement,
you've outlined how much equityyou could get from the home, what
your spells or child support, ifthere is any, is going to look
like.
Those are the numbers that you're
going to provide to your brokerand your broker is going to put
that in your application and mapout, one, what you could look at
for a new property based after thesale division of the asset.
(03:24):
Or the second option is if youwant to stay in the home, say it's
your family home, it's close tothe school, kids are super happy
there.
The only thing you don't like
about the home is your partner init.
You can do what's called a spousalbuyout.
And that is you doing essentiallya refinance, but it's structured
as a purchase.
And you take the equity from that
and pay out your partner.
Now, there's a real beauty to this
(03:44):
because you can go up to 95% ofthe home's value provided you
qualify and give them the equitythey need to move on.
Awesome.
So what would be the next step
Yeah.
So once you agree on that and you
figure out what course is best foryou, then really it's just a
matter of getting everyone on thesame page.
And I find if you can get yourbroker on the same page to work
(04:07):
with both parties, it makes life alot easier.
And I'll give you a great exampleof one I just wrapped up this
week.
So basically, they own two
properties.
They own their principal
residence, and then they owned arental property.
And their strategy was that he wasgoing to keep the principal
residence, she was going to keepthe rental property, but they were
going to remove each other fromtitle on both homes.
Now, the principal residence wasworth more.
(04:27):
He was going to give her equityfrom that as well.
So a lot of moving pieces when youhave these types of arrangements,
because there's so many assetsinvolved, depending on how long
you've been together, thetrajectory of your career, so on
and so forth.
In this case, she needed to get
the $50,000 from his house toclose her refinance.
And he needed proof of hersclosing to close his refinance to
access the $50,000.
(04:48):
So a bit of a chicken and egg
scenario there.
And you can see where this got a
little bit messy.
If you were working with two
different banks or two differentbrokers, there's so much back and
forth and moving pieces requiredthat this would be a total fucking
nightmare.
Because I was on both sides and I
understood where things were at, Iwas able to just kind of connect
(05:10):
my two lenders and weave thethread through so that his
clothes, same day, we got the50,000, hers closed.
They had the condition of showingshe was removed from title, he was
removed from title, and everyoneset up funny from someone outside
looking in, you would think it'dbe such a weird thing to share the
same broker, but it truly isn'tfor all the reasons you just
mentioned.
And obviously, we can't speak on
(05:31):
behalf of every single broker, butworking with us, like we're
obviously going to be superconfidential about everything.
So none of it is shared amongsteach spouse.
Yeah, it makes things so much moreseamless if you're using the same
broker or bank.
100%.
Like anything makes I had to sharedetails from one party to the
next, I just always had an emailor a call go out and said, hey, I
need to share this detail to makethings work smoothly.
(05:52):
Do you consent to this beingshared?
Every time.
We probably had to do that about
12 times, but everyone felt supercomfortable with the process
because they're like, okay,nothing's being passed to the
party.
there's no strategic advantage in
the relationship or anything likethat it's just the ultimate goal
is to get you to your end goalfaster and smoother and in the
most cost effective way if you hadthat get messy with two lawyers
who weren't aware of where thingsare at your costs start to pile up
(06:14):
everything gets more expensive andit's just a total nightmare so if
you had any advice for someonegoing through this process, like
what would it be?Where to start?
We kind of went through thatalready.
But just to summarize Yeah, soquick summary, I would say get on
the same page in regards to whatyou agree on for that separation
agreement.
So I would say start with a
mediator, start with someone thatyou can kind of have that shared
(06:36):
conversation with.
And then from there, if you can
agree to use the same broker, it'sgoing to make your life a lot
easier, because they'll know thewhole picture and will be able to
guide you both to your respectivedestinations.
done, Brandon.
So if you have any questions at
all, please comment down below.
If it's something more personal,
shoot us an email that's in ourdescription notes as well.
And of course, hit subscribe, hitthat like button and bell icon.
(06:57):
That way you don't miss out onfuture videos.
Thanks for watching.
Cheers.
significant other and you'retrying to figure out what to do
from a mortgage perspective, thisvideo is going to explain exactly
that and go over all of the movingpieces you need to know.
For sure.
So really, it comes down to
breaking up, it's not fun.
No one enjoys to do it.
Unfortunately, when you're marriedor you have kids or you share that
common home that you're investedin, there's a few more pieces that
(00:31):
come into play that make it alittle bit harder than the
traditional breakup where you justgo your separate ways.
So when you have the home orchildren in play, one thing that's
really important, this is like thelast piece that you guys really
need to work out and have aconversation on, is setting up a
separation agreement.
Having that separation agreement,
which outlines what happens withthe equity from the home if it
(00:52):
sells, or if you do a spousal bio,which we'll walk through in a
minute, what happens with thekids, what happens with spousal
support, all of these detailsreally help set the stage for what
happens with spells of support.
All of these details really help
set the stage for what happensnext for your next mortgage as all
lenders are going to ask for this.
There's no way around it.
They will all ask for piece.
So if you're someone that is, say
you're breaking up and you'reselling off your home and you want
(01:13):
to buy another home, do you need aseparation agreement for all
situations or just that one?So speaking, you do need the
separation agreement.
If a home or children are in play,
they're going to ask for aseparation agreement.
There are unique cases where youcan get what's called a statutory
declaration.
And this is done at your lawyer's
office prior to closing thatbasically says, you know, we can't
(01:34):
get a traditional separationagreement.
The terms are this, and itoutlines kind of everything and
you're signing agreeing to that.
Cases of that happening are
usually like one partner totallyfucks off and leaves the other
partner, or there's like an abusesituation with the kids or
something like that, and thepartner has to flee.
So there are cases where, youknow, like someone uses the
(01:56):
separation agreement kind of asemotional abusive situation and
doesn't sign it that we can use astatutory declaration, but there
needs to be a really good reasonfor it.
And those are a few examples thereof what that could And that's why
you got to work with a good teamon the mortgage side.
Like you got to have someonethat's going to vouch for you and
your story, because at the end ofthe day, yes, there's a lot of
(02:19):
systems and automations on theback end in the mortgage industry.
But the human aspect of it is theunderwriter that is going through
that file.
So your file, they're going to
look at the story and see if itmakes sense.
And if it doesn't make sense toask and request that statutory
declaration, then chances are thelender's not going to accept that.
So it really is crucial.
There is a story that actually
makes sense to the lender's eyes.
For And there's certain pieces
that like, obviously having thatstory, you want to back it up with
(02:42):
documents.
At the end of the day, having
documentation helps in ourindustry.
So if you have something from likethe family courts, or you have
things that show that you've triedto have this conversation to get
the separation agreement just notworking, then that's kind of what
you would use to support your caseto the lender.
So go back to the first step.
If you're someone that's going
through this situation, Brandon,like what is the first thing
(03:02):
someone needs to know?So once you know that agreement,
you've outlined how much equityyou could get from the home, what
your spells or child support, ifthere is any, is going to look
like.
Those are the numbers that you're
going to provide to your brokerand your broker is going to put
that in your application and mapout, one, what you could look at
for a new property based after thesale division of the asset.
(03:24):
Or the second option is if youwant to stay in the home, say it's
your family home, it's close tothe school, kids are super happy
there.
The only thing you don't like
about the home is your partner init.
You can do what's called a spousalbuyout.
And that is you doing essentiallya refinance, but it's structured
as a purchase.
And you take the equity from that
and pay out your partner.
Now, there's a real beauty to this
(03:44):
because you can go up to 95% ofthe home's value provided you
qualify and give them the equitythey need to move on.
Awesome.
So what would be the next step
Yeah.
So once you agree on that and you
figure out what course is best foryou, then really it's just a
matter of getting everyone on thesame page.
And I find if you can get yourbroker on the same page to work
(04:07):
with both parties, it makes life alot easier.
And I'll give you a great exampleof one I just wrapped up this
week.
So basically, they own two
properties.
They own their principal
residence, and then they owned arental property.
And their strategy was that he wasgoing to keep the principal
residence, she was going to keepthe rental property, but they were
going to remove each other fromtitle on both homes.
Now, the principal residence wasworth more.
(04:27):
He was going to give her equityfrom that as well.
So a lot of moving pieces when youhave these types of arrangements,
because there's so many assetsinvolved, depending on how long
you've been together, thetrajectory of your career, so on
and so forth.
In this case, she needed to get
the $50,000 from his house toclose her refinance.
And he needed proof of hersclosing to close his refinance to
access the $50,000.
(04:48):
So a bit of a chicken and egg
scenario there.
And you can see where this got a
little bit messy.
If you were working with two
different banks or two differentbrokers, there's so much back and
forth and moving pieces requiredthat this would be a total fucking
nightmare.
Because I was on both sides and I
understood where things were at, Iwas able to just kind of connect
(05:10):
my two lenders and weave thethread through so that his
clothes, same day, we got the50,000, hers closed.
They had the condition of showingshe was removed from title, he was
removed from title, and everyoneset up funny from someone outside
looking in, you would think it'dbe such a weird thing to share the
same broker, but it truly isn'tfor all the reasons you just
mentioned.
And obviously, we can't speak on
(05:31):
behalf of every single broker, butworking with us, like we're
obviously going to be superconfidential about everything.
So none of it is shared amongsteach spouse.
Yeah, it makes things so much moreseamless if you're using the same
broker or bank.
100%.
Like anything makes I had to sharedetails from one party to the
next, I just always had an emailor a call go out and said, hey, I
need to share this detail to makethings work smoothly.
(05:52):
Do you consent to this beingshared?
Every time.
We probably had to do that about
12 times, but everyone felt supercomfortable with the process
because they're like, okay,nothing's being passed to the
party.
there's no strategic advantage in
the relationship or anything likethat it's just the ultimate goal
is to get you to your end goalfaster and smoother and in the
most cost effective way if you hadthat get messy with two lawyers
who weren't aware of where thingsare at your costs start to pile up
(06:14):
everything gets more expensive andit's just a total nightmare so if
you had any advice for someonegoing through this process, like
what would it be?Where to start?
We kind of went through thatalready.
But just to summarize Yeah, soquick summary, I would say get on
the same page in regards to whatyou agree on for that separation
agreement.
So I would say start with a
mediator, start with someone thatyou can kind of have that shared
(06:36):
conversation with.
And then from there, if you can
agree to use the same broker, it'sgoing to make your life a lot
easier, because they'll know thewhole picture and will be able to
guide you both to your respectivedestinations.
done, Brandon.
So if you have any questions at
all, please comment down below.
If it's something more personal,
shoot us an email that's in ourdescription notes as well.
And of course, hit subscribe, hitthat like button and bell icon.
(06:57):
That way you don't miss out onfuture videos.
Thanks for watching.
Cheers.
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