Dear Property Guy:

My husband and I are getting an amicable divorce. No attorney. We have two houses, which are the problem. One house is our primary residence, his parents live rent-free in the other.

The intent is for him to cash me out of the primary residence so our daughter and I can continue to live there. But he can’t afford to do that with the house that his parents are in.  I adore his parents, and we’d like to keep the other house together so his parents can continue to live there. When they move, we would split the money. How would you suggest we structure this to ensure that his parents have a secure residence?

— Big D PDX



Dear Big D:

I need to start with a note to our gentle readers: All the questions here are real. I can’t make this stuff up. Being Property Guy often involves relationship counseling.

OK, I’m back. I’m seeing a few red flags here: divorce, in-laws, money, kids, and real estate. While things are smooth now, any one of these has the potential to go nuclear in the future.

For the primary residence, spend a few hundo on a certified residential appraiser. This will eliminate any current or futures questions as to the value. In more volatile divorces, it is not uncommon for each party to hire their own appraiser. Your husband buying you out should not trigger any taxable events, but definitely consult your CPA.  

You are super-kind to want to help your husband’s parents. But keeping a second house jointly has train-wreck written all over it, with so many ways that things could go wrong. While a house is generally an appreciating asset. It requires time, attention, and sometimes costly maintenance. Think through how you will handle the house needing a new roof, or when a pipe bursts. My best advice is to forget the whole thing, sell the house, split the money, and help the parents find a smaller place to live. Anything else is just asking for future drama.

I did consult one of my smart lawyer friends and he thought this was a crazy idea as well. But he could imagine a scenario where you both put the house into an LLC as partners, signed a long-term lease at minimal cost with the parents, and hired a management company. You would need to work through such things as: how taxes are handled, how maintenance will be performed and paid, as well as the disposition of property after the parents leave. But that’s what attorney’s billable hours are for. Good luck!

— Mike



Mike Zoormajian is principal at WetDog Properties in Sisters, OR.  Providing local property management and investor services. Questions, comments to: letters@wetdogpnw.com.

Free legal advice is worth what you pay for it. Consult a real attorney before doing anything crazy.