Blog Archives

Keeping the Marital Home in Divorce and Pitfall for the Unwary

2/24/2021

Keeping the Marital Home in Divorce and Pitfalls for the Unwary
by Mary Salisbury
Supporting Effective Agreement

Keeping the marital home in divorce and pitfalls for the unwary.

In most marriages there is a marital home and it’s often the largest, or one of the largest assets. Particularly if there are kids, in divorce, one spouse often wants to keep the marital home.

There are pitfalls for the unwary in divorce as it relates to the marital home that can arise long after the mediation has been completed. As mediators, we can provide the service of advising our clients so they can avoid these pitfalls that could create bitter feelings towards their ex plus end up affecting their financial life for years to come.

Being off the deed doesn’t relieve financial responsibility. Without proper guidance, one spouse may agree to sign a quick claim deed to transfer the deed to the other spouse (the “house spouse”) pursuant to their settlement, without realizing they would keep financial responsibility without ownership interest. Unfortunately, most lenders will not allow one spouse to simply assume the existing mortgage. If both spouses are on the mortgage, refinancing will probably be required to take one spouse off the mortgage. No matter what the settlement agreement or divorce decree says, if a spouse’s name is on a mortgage, the lender WILL hold him or her responsible for the mortgage payments. The mortgage will also continue to show up on both spouse’s credit report as an obligation which often keeps the spouse who wants a new house of his or her own from getting a mortgage, or for that matter, any loan they may need for other purposes.

Refinancing may not be possible. We know that money problems are a root to many divorces. It’s not uncommon for refinancing to not be possible. While two incomes may have been enough to qualify for a mortgage to buy the marital home, one income may not be enough for the house spouse to qualify for refinancing. It’s common for the mom to want to keep the home, but her income, even with support, may not be enough. Also, refinancing comes with a cost. Fees for refinancing can be 2-4%, interest rates may have increased and the credit score of the house spouse may not be good or may have gone down which in most cases, will make the overall cost of the mortgage higher.

I’ve had more than one phone call from folks seeking help because their settlement agreement said the ex-spouse got the house and would refinance but that was not happening. Meanwhile, they were stuck in an apartment, because they were still on the marital home mortgage. Even worse, their credit was taking a hit because the house spouse was not making mortgage payments.

It may take time for support to be counted as income for purposes of qualification. When the house spouse is depending on spousal support, child support or other payments made under the separation agreement to qualify for a loan, he or she may be surprised that a certain number of payments must be made both in the past and into the future to qualify for a loan. The number of payments required will depend on whether a conventional loan or an FHA loan will be used. With a conventional loan, Income from spousal support, child support or separate maintenance payments may be considered qualifying income if the documentation shows that the payor was obligated to make (and consistently made) payments to the house spouse borrower for at least the most recent six months and is obligated to make payments to the borrower for the next three years. Evidence (documentation) is required. With a FHA loan, if using a final divorce decree, legal separation agreement or court order, income from spousal support, child support or separate maintenance payments may be considered qualifying income if the documentation shows that the payor was obligated to make (and consistently made) payments to the house spouse borrower for at least the most recent three months. If receiving voluntary payments from an ex-spouse, the house spouse borrower must provide proof of twelve months of timely payments. In both cases, proof that payments to the house spouse are required for the next three years is required and evidence (documentation) is required. (Note: These time period requirements may change but the important thing to keep in mind is that there will be a delay when qualification is dependent on support payments.)

As mediators, we do our clients a service by inquiring about the ability to pay a mortgage, explain these pitfalls to our clients and recommend that the house spouse get a commitment letter from a bank prior to finalizing the settlement agreement.

There may be unknown title problems. Down the road, the house spouse may decide to sell the home and problems with the title may be discovered during the preparation for closing. Title issues have to be fully settled before a home can be sold, and the problem is common enough that 11% of closing issues revolve around title problems. The house spouse is stuck paying for the costs related to clearing up the title. The best way for the house spouse to protect him or herself from an unwanted surprise is to perform a title search during the divorce process which costs about $75 to $200. Some of the most common title problems are:
1. Liens: Liens from back federal, state, or local taxes or unpaid bills to contractors, liens from previous owners, and liens in the form of judgments, which are court-obtained documents from unpaid creditors or a parent requiring child support.
2. Heirs of previous owners: If the home’s previous owner passed away before selling the home, the house spouse could end up facing heirs that come forward claiming right to the property.
3. Public record errors: A clerical or filing error may seem minor, but these can take quite a while to resolve.
4. Identity Concerns: When people have common name, a homeowner may be mistaken for someone else who is facing judgment. For example, if someone in the community has the same name and is taken to court for back child support, the judge could mistakenly file a lien against the wrong property.
Costs of sale. Sometimes one parent will want to keep the marital home for just a few years. One common reason for this is to keep the kids in their home until they move out or go to college. It may not occur to them that he or she will be paying for all of the closing costs on their own. That’s big money and reason to consider selling the home now and splitting the closing costs or agreeing to share closing costs and setting an agreed upon date by which the house will be sold.
Home insurance does not get changed. Not updating homeowner’s insurance policies can come back and cost the house spouse thousands of dollars. It happens like this:

-The husband is insured and the wife is a beneficiary. (This is often done this way because a spouse has lower credit scores.)

-They get divorced and wife keeps the house. No changes are made to the policy.
-A storm happens and a tree falls resulting in a $6,000 repair.

-Wife goes to file a claim but because she is a beneficiary, the claim is declined or the money is sent to the husband because he still shows as the insured.

Innovative Ways to Use Mediation (other than Dispute Resolution)

2/18/2021

Michael Lodge, NCPM, CRTP
Nationally Certified Professional Mediator

This is an excellent article on how to use mediation in other areas of business and life. This is from Mediate online magazine. I have been brought into business and personal issues that have not been disputes, especially in the corporate world and it's constant change. Enjoy the article and think about using mediation in various areas of business and life.

by Jharna Jagtiani, Aanchal Gupta
February 2021
The mediation process is inherently flexible. Traditionally, it is used as a dispute resolution tool where parties can come together, call a timeout and reach a mutually acceptable solution. But in the time of a pandemic or even otherwise, there are several uses of the mediation process. Different situations and circumstances can bring out several issues that one might face especially when working in a group or dealing with other people in general. Principles or even the process of mediation can help figure out a plan or a strategy for the developments and help tackle any issue faced by the parties.
Here are some instances where mediation can be used other than resolving disputes -

Structural Changes or Changes In Organization – Mediators have often been engaged to conduct sessions when a business organization is looking to make changes. In the times of a pandemic, almost all the business organizations have suffered and need to adapt to the structural changes. They have suffered in most areas of their working, if not only in profitability and/or financial terms. New goals to dissolve, or split up, or reorganize the organization can be mediated. Issues with every individual’s situation can crop up in several matters due to the changes that need to be made as a result of the pandemic. Structural changes in the business organizations are fundamental changes. The pandemic has rendered these kinds of transitions/adjustments important, mediation can help the members to adjust to them in a better way so as to reduce any kind of friction and avoid conflict.
Reality Check – Prevention is better than cure. Before a thought, opinion or disagreement can turn into an actual conflict, it is advisable to take regular mediation sessions like once every 3 months to gauge the possible conflict points in the workplace and put out the fire. Mediation is a safe space which can be used to address and discuss concerns without blaming any party. Mediation helps parties to gauge their situation and concerns that they may have with each other. It can be used as a way to avoid any dispute and get ahead of the situation. If there are any concerns or any problems, it can be addressed and solved. The aim of the mediation in this situation is to address the needs of the parties. The pandemic has created unusual circumstances for everybody. Mediation can be used by employees to address concerns with their employer, colleagues to address issues, partners to bring up any concerns, etc. The communication can be facilitated by the mediator to ensure that there are no kinks in the smooth transformation of the work process. These tough times have enabled.
Estate Planning – People often spend a lot of money in engaging advisors for estate planning. Family relations are strained; blame game is witnessed by counsellors, litigation is stretched out for years, hatred is passed over generations and years later it ends but the question remains, was it all worth it? An issue common to all these cases is miscommunication or lack of communication all together. Mediation helps in solving this issue. With the involvement of multiple advisors and even attorneys, family members do not have a chance of talking about their positions and interests. The topics in such discussions are also strained because of the sensitivity of the issues involved i.e. death and money. Mediators can be cognizant to the emotions more than lawyers as they stand in a neutral position and they are not working for the interests of one of the parties. They can assist the beneficiaries and allow all the interests and positions to be laid out on the table. This can lead to mutual agreement and overall satisfaction without the matter being dragged on for years. The collaborative nature of the process ensures that there is no harm done to any stakeholder’s interests while preserving their relationship. The mediation process can ensure that the agreement concluded at the end of the proceeding is acceptable by all the concerned parties and this reduces the risk of malpractice claims against advisors and lawyers.
Co-parenting – When parents are involved in a divorce, custody battles are common in these cases. This makes the relationship of the child and the parent bitter and often ends it completely. It is like a child divorcing one of the parents. However, to ensure that the child has both of the parents by his side more and more (ex) couples are now opting for co-parenting. To avoid conflicts and custody battles, parents opt for mediation. Mediation helps the parents divide the responsibilities, plan the finances, take care of the good environment needed for child rearing, etc. Co-parenting is a life-long relationship. The broken relationship of the parents also affects the child’s belief system. The child can lose faith in relationships, establish trust issues, and lose sense of family and companionship, when the child witnesses quarrelling parents. Co-parenting with the help of mediator can help establish a working relationship between the parents so as to ensure that the child’s mental health is not hampered due to their conflict. Planning and discussing the details of the life of the child will ensure that the child has the love of both the parents and none of them have to abandon the child because they could not work it out with the other parent. Even though there is no conflict about the children yet, mediation helps to avoid future conflicts in a divorce. It prevents the conflict of the parents to be projected on the children. The end goal of every parent is a good upbringing for their child and this can be achieved with the help of mediation.
Customer Loyalty – An effective grievance redressal mechanism that has a speedy process can help build consumer loyalty. If the customer has any issues and the same is handled on the spot or with 24 to 48 hours, it gives the customer the sense of importance. It indicates that the organization cares about the customer and their needs and issues. Even though mediation is used when there is some kind of concerns, this process consequently helps in building loyalty. The customer knows that their issue will be taken into consideration, resolved and they would be compensated for the inconvenience caused as per the situation. Mediation gave them a sense of importance, increased their satisfaction from the service and ensured that they do not choose the many alternatives available in the market.
Changes in modus operandi – If there are changes in the mode of working of any organization, it will inevitably lead to some issues. The new mode would require some learning, on-boarding, training, etc. This kind of transitions lead to issues and conflicts as dealing with every personnel and the new mode of working has different effects. With the working mode changing to online systems and work from home scenarios, there are several changes that a business organization needs to make. So even though there is no pre-existing dispute, a mediator can be engaged to mitigate these activities and discussions. Every person will face an issue with changes around them; mediation can help mitigate these problems and prevents them from transforming into a conflict against the management. Mediators act as neutrals who convey the issues of the system from the side of the employee and the need of the new system from the side of the management of the company. These interest positions are aligned and solutions to help them are devised. More often than not different divisions in a company work together, prior to the pandemic they were set in a decided pattern but the pandemic necessitated to alter such patterns. Teams need to adapt to the new world and make new patterns to co-ordinate; employers can use mediators to bring together the teams.
Wellbeing of the employee - In the pandemic, a working man has been affected the most. They are crunched with problems from work and their households. To ensure that the workflow is maintained and the well being of the employee is kept in mind, employers engage mediators to help the employees and themselves. The employee is as important to the company as the company is to the employee. One cannot function without the other. Any issue that the employee is facing would directly affect the work that they are doing in the organization. Hence, the problems of the employee are the problems of the business organization.
Strategize – Mediators have often been brought in by companies to act as liaison between the management and the employees. Strategy moving forward is a matter of concern. When the management needs to introduced new changes in the working set up and/or when they need to set in a different strategy that has an effect on their employees; mediators have been brought in to facilitate such a conversation. The underlying interests and the positions of both the sides are brought to the table and a mutually agreeable step is taken. The business can only function if the employee works in consonance with the strategy and a strategy can only bear fruit if the right amount of work and dedication is put toward it.
Brainstorming Space - More often than not different divisions in a company work together on a single project. A space of brainstorming ideas, exploring possibilities and arriving at decisions is easy when mediation is involved. It is beneficial especially where there are several people working together as a team or various teams/groups working together. Mediation can bring out a safe space for different stakeholders and enable quality discussions. Emotions often run high as individuals are passionate about their work and their projects; mediation can help accommodate them without such discussions leading to conflict. It can help create a space where people can agree to disagree and mutually acceptable conclusions can be found which ensures that several individuals can work together.
M&A Transactions – When a merger or acquisition transactions takes place, there are several details that need to be finalized. There are several moving parts in the organizations that are merged or acquired and the finer details need to be hashed out so that a smooth transition can take place without a huge cost. The deal is carved out so the parties involved can achieve their goals; they would have certain expectations from the deal and would expect those to be met. However, in the finer details there can be several disagreements, to ensure that these do not escalate to a dispute and hamper the transition and/or the deal, mediation can be used. The parties involved can come to the table to finalize the gazillion details involved in the deal and ensure as smooth a transition as it can be. Concerns of shareholders, creditors and other stakeholders can also be addressed through mediation.

Mediation is a voluntary, non-binding, informal process that helps the concerned parties to come to a table and talk about their concerns or conduct any negotiations that they need to. As effective as mediation is in resolving the disputes by deliberating upon the interests and positions of the parties, but it can also prove to be an effective tool when introducing new changes, strategizing, planning, etc. If we need to align interests of different people who are working together or need to collaborate, then mediation can help them find a common ground from the very start instead of waiting for a conflict and then resolving it. Mediation can also be a fast and economic way to ensure that costly conflicts and/or litigation don’t take place. The conflict does not only cost in terms of resolution but also causes lose in terms of the work and emotional costs are another concern. Mediation process will be able to help create a safe and friendly environment thereby reducing the mental stress that a person might go through in case of a conflict.

Mediation Of Construction Disputes

2/18/2021

Michael Lodge, NCPM, CRTP
Certified Mediator - Hearing Officer
Email: info@lodge-co.com
Website: www.lodge-co.com
Providing mediation and business advisory services nationwide.

Mediation should be used in construction disputes more. There are issues that arise on almost every construction site that leads to a dispute. It can be a change order that was not approved, billing for materials not part of your construction, over charges, construction quality issues, construction schedules and various charges for being late, warranties on the work and the list goes on. Mediation provide both parties mediate and resolve disputes prior to going into a costly legal battle.

Here are some ways to prepare for mediation.

1. The role of the mediator
Mediation is geared to resolving the dispute. One feature is the chance to hold confidential discussions with the mediator. The opportunity to discuss issues with the mediator in private can often be a more appealing way of getting a point of view across rather than being constrained by what has been prepared.

Once the mediator has a grasp of what is driving the dispute then he or she can get to work. Mediators are independent and neutral. They will use their knowledge and experience of the law and construction to rigorously test what each party is saying and help parties decide on what terms a case might be settled.

Preparation is therefore geared to helping the mediator to help the parties with identifying the point at which one or more of the parties have a reason to settle: the point at which the benefits of reaching a settlement outweigh the alternatives.

2. Representation
Mediation is not adversarial in nature, unlike adjudication or court proceedings. Parties to a dispute can mediate their differences without legal representation. That said, legal representatives can and do serve a useful role in assisting the mediator, identifying the issues and advising their clients on settlement as well as the consequences of the alternatives. If you have a grasp of the facts and feel you can mediate on your own, mediation allows you that opportunity.

3. Know the case
Knowing the facts is key to your opening statement to the mediator at the time of the mediation session. If you have all of the facts ready ahead of time it will provide the other side a clearer understanding of your dispute. Prepare a “punch list” of items that need to be discussed, the costs associated with them. If you have contracts provide that to the mediator so he has a better understanding on the relationship with the you and the other parties.

Clarification of issues and disclosure of documents before mediation meetings is an important part of the process. Mediation meetings can then be used to test issues once the parties have shared relevant information and settlement options explored.

4. Be prepared to negotiate
A dispute is seldom settled by trying to persuade the mediator that your case – and your bottom line – is the right outcome, but because one or more of the parties does not have a better alternative. This inevitably means you need to identify the point at which you will walk away from the mediation without a settlement. If that is less than the other party’s bottom line – what they are prepared to settle for – then the dispute will obviously be settled.

5. Be prepared to make hard decisions
An experienced mediator will test you as well as your case. Be prepared to listen to criticism. Consider that the mediator may try to help you rationalize your own case as well as giving a clue about the other side’s bottom line without breaching confidentiality. Parties often push back against hard questions from the mediator. Rather than push back, take the opportunity to reassess your own prospects of success.

6. Aim for settlement
As noted above, settlement rates are high. This reflects the fact that management of risk in dispute resolution is hard to achieve in more adversarial processes. The benefits of mediation are many and being familiar with how to prepare for mediation might just persuade you to consider mediation not as an alternative but as the norm.

Separation, Parenting, and Communication

2/16/2021

Michael Lodge, NCPM, CRTP
Nationally Certified Professional Mediator
Business and Family Mediation
Phone: 305.824.2963
Email: info@lodge-co.com

Communication is the source of focused determination to make things work. If you have no communication, you have nothing to resolve issues with. In every separation or parenting mediation that I do, it is seldom to see civil communication between individuals. Some individuals say nothing, and others say way too much that sets off an even greater fire. The process of mediation is to help those to develop rules of engagement, ways to communicate so that civility outweighs the anger of emotionally charged individuals. Not everything needs a book of information and arguments, not everything needs a response. Use the 25 words or less rule and you will think before you speak, and you can control your tone. The way we communicate creates conflict. I know, I have heard and read it when in mediation.

There are characteristics of conflict that include the following:

Incomplete communication - one of the parties to the conflict did not hear the whole story, or didn't read the whole story as written.

Inaccurate information - one of the parties to the conflict had the wrong information or intentionally sent the wrong information.

Stress Overload - one of the parties to the dispute was confused, overloaded, or stressed.

Different viewpoints - the parties to the dispute see things differently; the parties may have different beliefs or values.

Limited resources - Neither party can have it all because there is not enough to go around.

Now communication can be resolved. Sometimes it means going into family counseling to learn how to communicate, especially for those where their communication is doing damage to the children. Communication and the words used creates a tension and stress in children, you may not see it because you are so focused on winning an argument. Or your just too stubborn to look at the damage you are doing. You want to be right; you think your way is the right way. Instead of looking at other options, such as counseling, you choose to go in your own direction not realizing that your actions are creating a greater damage. These types of people are very dangerous to the children in the family because they come second. Children should always be the priority even if it means you giving something up.

When communicating with the other party, do not over complicate it. Simplify and be clear on what you need to know. Say exactly what you need to know, do not add so much to it. Be simple and clear. Remember, we are practicing the 25 word or less rule. Keep it simple with the question or request and those responding - provide the information back with the 25 word or less rule. Questions and requests do not need to be books.

The other issue is that facts rule. When having a discussion stick to the facts of the issue, do not go back into the past and start bringing that up again. As a mediator I do not need to know the history, I want to focus on the issue at hand and how we can resolve them. And, drum roll, so should you. Keep to the facts of the current issue. You cannot change history no matter how many times you tell the story. Going back creates anger alive. Too many words make a mess, less words keep you focused on results. Easy?

When you are writing an email or text, or if you are using an app to communicate with, design a template for yourself to use. Use it every time you communicate. Let's look at an example:

TEXT OR COMMUNICATION TEXTS OR APPS (25 words or less rule)

Text or Email: Can you give me a dates of when you need Bobby watched?

Receiver Response: June 22 - 25.

Sender: Ok, I confirm those date, Bobby will be at my home on those dates.

SERIOUS ISSUES VIA EMAIL__________________________________
Date: Feb 16, 2021

RE: Bobby

Goal of Email: To learn more about the behavior issue at school and what needs to be done.

Issue: I am concerned that Jack was punished at school for his behavior in the classroom with the teacher. It is so very important that we address this issue together. I understand that you responded to the school.

Follow Up Requested: Please let me know what happened at school. Also please agree to keep me in the loop in the future. Through our communication app is fine.

I have reviewed the above before sending and have made every earnest effort to remove anything that could be considered a naked or veiled insult or unnecessary commentary.

Kindly,
Your Name

Disclaimer: No offense or insult was intended, either overtly, covertly, consciously or unconsciously, by any of the above.
_________________________________________________________

The shorter the communication the better, the more defined communication on important issues, and the tension will be less. The more you read the angrier you become. Write short messages, get to the point, and move on. It should take just a few moments of your time. If it is taking long, then you did not follow the 25 words or less rule and decided to go with a book that no one wants to read. Short and to the point gets to result and you can move on with your day.

Got it? Do it! If you need help on mediation communication conflict, let me know. Separation, divorce, parenting plans, all work only with good communication. 25 words or less rule.

The Business Advisor

Keeping the Marital Home in Divorce and Pitfall for the Unwary

Innovative Ways to Use Mediation (other than Dispute Resolution)

Mediation Of Construction Disputes

Separation, Parenting, and Communication

Author

Archives

Categories