Why foreign properties are least desired in divorce

[SINGAPORE] When marriages end in divorce, many financial and emotional issues arise, but one factor that often gets overlooked is the ownership of foreign properties. While owning real estate abroad can appear like a symbol of success and financial security, it becomes a major point of contention during marital breakdowns. Whether it's the complexity of cross-border legalities, fluctuating foreign currencies, or just a lack of emotional attachment to the property, foreign properties are frequently considered the least loved asset when marriages fail.

The Appeal of Foreign Properties in Marriage

Before exploring why foreign properties are often dismissed or undervalued during divorce proceedings, it’s important to understand why couples invest in them in the first place. Many marriages see the purchase of a property abroad as a symbol of financial success or a way to secure a future retirement home. For others, it’s an investment in diversification, hoping that overseas real estate will generate profits due to the property’s location or potential for capital appreciation.

Foreign properties are often viewed as a trophy asset—something that can reflect a couple’s lifestyle, taste, and wealth. This investment might also be seen as a way to build security for future generations. Many people buy properties overseas not just for lifestyle reasons, but for investment purposes too, expecting them to deliver returns over time.

However, when a marriage unravels, this same investment often turns into a liability. Divorce brings with it a myriad of complications regarding asset division, and foreign properties stand out for the unique challenges they present.

Why Are Foreign Properties Least Loved During Divorce?

1. Legal Complexity Across Borders

One of the most significant reasons foreign properties are less desirable in a divorce is the legal complexity involved. Unlike domestic properties, which are governed by familiar local laws, foreign properties are subject to foreign legal systems that vary widely. This creates uncertainty and difficulty when it comes to ownership, maintenance, and transfer of assets.

Foreign properties might be difficult to liquidate due to the complex legal frameworks that exist in many jurisdictions. Selling or transferring property can be a difficult and expensive procedure, whether owing to differences in inheritance laws or complications with foreign ownership.

This complexity often results in long delays and high costs, particularly if one party is trying to sell the property in order to divide the proceeds. In countries where foreign ownership is restricted or heavily taxed, this becomes even more challenging. Couples may be forced to hold onto the property longer than desired, which leads to frustration and financial strain.

2. Emotional Detachment and Lack of Connection

Unlike the family home, which is typically a place where couples share memories, milestones, and experiences, foreign properties tend to lack that emotional connection. In many cases, these properties are seldom lived in or visited, which makes them less meaningful to one or both parties in the event of a divorce.

Many couples who buy foreign properties use them as investment vehicles rather than primary residences. Because of this lack of emotional connection, overseas properties frequently fall behind in terms of relevance when it comes to asset division.

The absence of a personal bond with the property reduces its perceived value, both emotionally and financially, making it easier for one or both parties to let go of it without much resistance. For example, the property may hold no sentimental value, especially if it was purchased solely as an investment.

3. Difficulty in Liquidating the Asset

Selling a property abroad can be a complicated and time-consuming process. Market conditions in foreign countries may not be as favorable as those in the home country, and finding the right buyer can be difficult. The property’s location can also impact its attractiveness to potential buyers—if the property is in a less popular or less developed area, its marketability is further diminished.

Moreover, fluctuating exchange rates can further complicate matters. The value of the property in its local currency may differ greatly from the value in the home currency, and this discrepancy can lead to financial losses when trying to liquidate the asset. The property may not fetch a price that matches its purchase value, particularly if the local real estate market is in a downturn or if currency fluctuations have affected the investment.

This inability to quickly liquidate the asset creates an additional headache for divorcing couples, as they may not be able to access the funds they need to settle other matters in the divorce, such as dividing joint bank accounts or paying alimony.

4. High Maintenance Costs

Owning a foreign property involves additional ongoing costs that can quickly add up. These costs may include property taxes, maintenance fees, insurance, and utilities. For a divorced couple, the financial burden of maintaining the property, especially if one party remains in the home country, can become overwhelming.

A foreign property may appear to be a valuable asset at first, but maintenance can be costly. Property taxes, for example, can vary greatly between nations, and if the property is in a high-cost country, it may be difficult to keep up with bills after the couple divorces.

Couples may also face the challenge of managing these costs from different locations, making coordination difficult. If one party has to take on the responsibility for the upkeep, resentment can build, leading to further complications in the divorce process.

5. Different Financial Priorities Post-Divorce

After a divorce, both parties often have different financial priorities and goals. One spouse may prefer to retain ownership of the foreign property as a means of holding onto the past, while the other may prefer to sell it to secure funds for their new future. This mismatch in priorities can create tension and make it harder to reach an amicable resolution.

When a marriage ends, financial priorities frequently change. What appeared to be a good investment may no longer be in line with the individual's aspirations. Foreign properties, in instance, may not provide the same quick financial returns as liquid assets such as cash or equities.

Some individuals may also feel that the foreign property ties them to the past, whereas others might prefer to completely sever ties to their former life, including the properties abroad. In such cases, selling the foreign property and dividing the proceeds is often the easiest and most straightforward option.

Foreign properties are often viewed as a valuable asset during a marriage, but they can quickly become the least loved asset when a marriage fails. The complexities of international law, lack of emotional attachment, difficulty in liquidating the property, high maintenance costs, and conflicting financial priorities all contribute to their reduced desirability in divorce proceedings. For many couples, the foreign property—once a symbol of success and financial stability—becomes a burden that neither party wants to deal with post-divorce.

Owning overseas properties may appear enticing at first, but when confronted with the realities of a divorce, they are frequently viewed as complex liabilities rather than valuable assets.

Ultimately, the decision to buy foreign real estate should come with a clear understanding of the long-term responsibilities involved. It’s crucial to consider how such an investment may impact the future, particularly in the event of a separation or divorce.