Divorce often requires liquidating real estate assets, including apartment buildings. When a multifamily property is part of the marital estate, selling it requires careful navigation of both real estate and family law considerations.

When you need to sell an apartment building during divorce, the process requires careful coordination between real estate and family law. Understanding your options can help protect your interests and maximize your outcome.

Why Couples Sell Apartment Buildings During Divorce

Unlike a primary residence, an apartment building typically can’t be easily divided. Common scenarios that lead to sale include:

• Neither spouse wants to manage it alone: Running an apartment building requires active involvement
• Buyout isn’t feasible: One spouse may not have the liquidity to buy out the other’s share
• Clean break preferred: Both parties want to divide proceeds and move on
• Court-ordered sale: When spouses can’t agree, the court may order liquidation

The Valuation Challenge

Agreeing on value is often the biggest hurdle. Unlike single-family homes with abundant comparable sales, apartment buildings are valued based on income, cap rates, and market conditions.

Getting an Accurate Valuation

• Broker Opinion of Value (BOV): A detailed analysis from an experienced multifamily broker
• Formal Appraisal: A licensed appraiser’s opinion, often required for court
• Dual Appraisals: Each party hires their own appraiser, then negotiate or average

I provide detailed broker opinions of value that account for current market conditions, rent roll analysis, and comparable sales. This can help both parties reach agreement without costly litigation.

Types of Divorce Sales

1. Stipulated Sale (Agreement)

The best outcome: both spouses agree to sell, select a broker, set a listing price, and divide proceeds according to their settlement. This gives you control over timing and terms.

2. Court-Ordered Sale

When spouses can’t agree, the court may appoint a receiver or order the property sold. This removes control from both parties and often results in a faster, less optimal sale.

3. Buyout with Refinance

One spouse keeps the building by refinancing and paying the other their share. This requires sufficient equity and qualifying for a new loan—challenging in today’s rate environment.

Practical Considerations

Who Controls the Sale Process?

Ideally, both spouses work together or designate one person to handle day-to-day decisions. Alternatively, attorneys can manage communication to reduce conflict.

What About Ongoing Management?

While the property is listed, someone needs to manage it—collecting rent, handling maintenance, paying bills. Establish clear responsibilities or hire a property manager temporarily.

How Are Proceeds Divided?

The settlement agreement should specify:

• How sale proceeds are split (50/50, or adjusted for other factors)
• Who pays selling costs (commissions, closing costs, repairs)
• How existing debt is handled
• Tax implications for each party

Tax Considerations

Capital Gains

If the property has appreciated significantly, capital gains taxes will be owed. How this liability is allocated should be part of the settlement.

1031 Exchange Possibility

In some cases, one or both spouses may want to do a 1031 exchange into replacement property. This requires careful planning and coordination with the divorce timeline.

Depreciation Recapture

If depreciation was claimed over the years, recapture tax (25%) will apply to that portion of the gain. Factor this into your net proceeds calculation.

Working with Your Divorce Attorney

Your family law attorney handles the legal aspects of divorce. As your real estate broker, I handle:

• Property valuation and market analysis
• Marketing and finding qualified buyers
• Negotiating offers and terms
• Coordinating with both parties’ attorneys
• Managing the escrow and closing process

I’ve worked on numerous divorce sales and understand the sensitivity required. Communication goes through appropriate channels, and both parties receive equal information.

Timeline Expectations

Divorce sales often have timeline pressures—court deadlines, settlement dates, or simply the desire to move forward. A typical apartment building sale takes 60-120 days from listing to close, but this varies based on:

• Pricing accuracy
• Property condition
• Market conditions
• Buyer financing
• Both parties’ cooperation

Confidentiality

Divorce is personal. I maintain strict confidentiality about the circumstances of any sale. Marketing focuses on the property’s investment merits, not the sellers’ situation.

If you’re facing a divorce that involves an LA apartment building, request a confidential valuation. I’ll provide an honest assessment of your property’s value and walk you through the sale process.

Selling an apartment building during divorce requires expertise in both real estate and navigating sensitive situations. When you sell an apartment building during divorce, the right broker can help you achieve a fair outcome while minimizing stress. I specialize in helping divorcing couples navigate this complex process.