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Surviving Divorce: The Ultimate Guide to Protecting Your Rental Properties


Venturing into the world of divorce can often feel like twisting through a labyrinth, especially when rental properties enter the scene. Figuring out how to divide these valuable assets may stir up more than just emotional turmoil; it also plays into financial concerns and future stability. Navigating this terrain is far from simple, but understanding its complexity can provide clarity during an unsteady season of life.

During the divorce process, spouses and their attorneys will need to consider the properties’ values, along with the potential for rental income.

Who gets what? How will your monthly income be impacted? Divorce not only breaks hearts but also sculpts your financial future moving forward. Asset division is stressful, and the division of rental properties provides another wrinkle.  Rental properties often are both an asset and a source of income. Rental properties usually require continuous attention during the divorce proceedings and a decision which spouse will be responsible for the property, its associated expenses and possible income while the divorce is pending.  We’ve created this guide with helpful considerations for the person who would like to protect their properties during the divorce proceedings. 

  1. Obtain Advice About Asset Division According to Michigan Law.

Michigan law provides that marital property is subject to equitable distribution during divorce proceedings. Rental properties acquired during the marriage may be considered marital assets, potentially leading to a 50/50 split unless there’s a prenuptial or postnuptial agreement stating otherwise or if the court finds that the rental property is considered separate property. Obtaining advice whether the property can be considered separate property is a crucial first step in determining potential outcomes.

  1. Property Valuation and Assessment.

If the rental property is considered a marital asset, you will need to determine the fair market value. Engaging professionals like real estate appraisers can provide an accurate assessment, and your attorney can provide a referral for a reliable appraiser and guide you through the discovery process.

  1. Buyout or Sale Considerations.

Couples might opt for various approaches when handling rental properties. One party may buy out the other’s share and retain sole ownership, while another route involves selling the property and dividing the proceeds. When parties decide to sell the property, one must consider the loss of income as well, including its impact on spousal or child support obligations.  Deciding on the best course requires careful assessment of financial implications and future goals.

  1. Tax Implications.

Transferring ownership or selling rental properties can have tax consequences. Consulting with tax professionals helps anticipate potential tax liabilities, capital gains, or tax-saving strategies associated with property division to make informed decisions.

  1. Co-Ownership and Management.

Although divorced couples might opt to retain joint ownership of rental properties post-divorce, this is often not advisable.  Logically if the spouses were unable to maintain a marital relationship, a business relationship will also be difficult or impossible to maintain.  To liquidate the business after divorce will likely be more expensive than dividing the business during the divorce proceedings.

  1. Mortgage and Debt Responsibilities.

Dividing marital debt, including mortgages associated with rental properties, is part of property division. Parties should consider their ability to refinance the mortgage(s) if they wish to assume the debt because joint mortgages are not advisable for parties to secure financial freedom moving forward.

  1. Maintaining the Properties During the Divorce.

If the properties were managed by a property management company, parties will need to ensure that they treat the rental property business as a business and provide the court with accurate profit and loss and accounting records and possibly a business valuation.  If one of the spouse’s managed the rental properties during the divorce, it could be tempting to forego the necessary work due to lack of financial return or payment.  However, if a spouse wants to retain ownership to the rental property, the spouse should provide their proof of their investment into the properties to provide the court with a history of ownership.


Divorce involving rental properties is intricate and requires careful consideration and professional guidance. During the divorce process, seek legal assistance to obtain a favorable valuation and proposal to equitably divide the assets in a way that allows you to retain ownership of the properties. By addressing these complexities head-on and engaging in discovery, individuals undergoing divorce can navigate the challenges surrounding rental properties effectively, minimizing stress and potentially securing a stable future.

Remember, every divorce situation is unique. Consulting legal and financial professionals who specialize in divorce and real estate matters ensures that your specific circumstances are considered, guiding you toward a resolution that aligns with your best interests and secures financial stability moving forward. Give us a call at 616-285-0808 to schedule a consultation to discuss your options.