The Housing Trap! Is Co-Ownership the Answer?

Dealing with the cost of refinancing

Many couples today feel stuck in their marriages, not because they lack the desire to move forward, but because they can’t afford the financial impact of divorce—especially when it comes to housing. With interest rates now double what they were in 2020, refinancing or purchasing a new home is simply out of reach for many. If you're waiting for interest rates to drop to make a move, you could be waiting for years.

This housing trap can make it feel impossible to separate, but there’s an option that more and more couples are exploring: co-ownership. A co-ownership agreement can allow you to keep your current low-interest-rate mortgage, share the burden of housing expenses, and defer the sale or buyout of the home until rates are more affordable. Here's how it works.

How a Co-ownership Agreement Can Help

In our divorce planning practice, we’re seeing a growing trend of couples choosing co-ownership as a way to stay financially afloat during and after their divorce. The basic idea is simple: rather than immediately selling the family home or refinancing at today’s much higher interest rates, the couple agrees to continue co-owning the property for a set period of time.

This arrangement allows one spouse to stay in the home while the other moves to alternate housing, all while maintaining the favorable mortgage terms. The key to making this work is creating a detailed agreement that addresses a few critical areas:

Specify the duration of the co-ownership
A key part of the agreement is defining how long the co-ownership will last. Many couples choose a time frame of 2–3 years, allowing enough time for interest rates to fall and incomes to adjust. The length of the arrangement is flexible, but it should be long enough to allow for meaningful change in the financial landscape.

Plan for shared expenses
Next, the agreement should lay out how expenses related to the home will be shared. This includes monthly expenses like the mortgage, utilities, and property taxes, as well as larger costs for repairs and maintenance. Clear guidelines prevent disputes and ensure both parties are contributing fairly.

Define the exit strategy
Lastly, the agreement should specify what will happen when the co-ownership period ends. Typically, this means one of three things: one party buys out the other, the home is sold, or both parties agree to continue the co-ownership arrangement under new terms. Whatever the case, the plan should be clear and detailed, leaving no room for ambiguity.

Documenting Your Agreement

At the heart of any successful co-ownership arrangement is clear, detailed planning. We can help you design and create a plain language document that outlines every aspect of your financial and parenting plans. This memorandum would include any co-ownership agreements, covering all the important details, such as the duration of the arrangement, shared expenses, and the exit strategy.

Once this document is complete, it is given to an attorney to formalize into your settlement agreement.

Is Co-Ownership Your Best Option?

There are other ways couples deal with the high cost of housing and the expense of divorce. We can discuss these other options with you and analyze whether they make financial sense as part of our work as divorce financial analysts. Just give us a call.

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