New York real estate can be incredibly valuable, which is why many people use it as an investment. In addition to a home and a vacation property, married couples might acquire properties that can generate rental income or that are likely to appreciate in value over time.
Those with complex real estate holdings may worry about the implications of owning multi-unit buildings, land intended for development, commercial properties and other investment real estate holdings when they divorce. There are unique challenges that arise when the marital estate includes a portfolio of investment real estate. Spouses likely require guidance to ensure that they effectively address the complications generated by a real property acquired as an investment, rather than a primary residence.
What issues may arise when one’s marital estate involves complex real estate holdings?
Issues with valuation
Determining a reasonable fair market value for investment real estate can be a challenge. A parcel zoned for commercial or industrial purposes might be worth 10 times its current value if owners can wait a decade or two to sell in some cases. There may be long-term plans to develop the property that a divorce could disrupt. Working with professionals to determine what each property is worth may be necessary, and spouses may dispute the values set for their shared properties.
Challenges related to holding entities
Spouses with diverse real estate portfolios may not have their names on the titles for the properties they acquired. They may hold the property through a limited liability company (LLC) or trust. Especially in cases where both spouses are potentially involved with the management of a trust or a business, there may be significant hurdles involved in liquidating investment properties or allocating them to one spouse.
Balancing property value
When a significant portion of the marital estate comes from investment real estate holdings, it may be difficult to properly offset those resources using other marital assets or marital debt. Especially if only one spouse has an interest in retaining the properties or an ability to maintain them, finding ways to balance the marital value of a multi-family home, commercial properties and investment parcels can be a major hurdle during property division negotiations.
Preparing for complex high-asset divorces involving diversified marital assets generally requires the assistance of an experienced New York divorce attorney. Spouses with legal guidance can more effectively understand their rights and more effectively navigate the challenges of valuing and dividing investment real estate.