Who Gets The House In Divorce?
The first issue regarding the family home is often a determination of who will retain possession of it while the divorce is pending. The decision on who gets the house in divorce is typically made by the spouses out of court. Later, it must be decided whether the house will be sold or whether it will be awarded to you or your spouse.
If you and your spouse are unable to reach an agreement regarding the house, the judge will decide who keeps it or whether it will be sold.
Regardless of who is awarded your house, the court will consider whether the spouse not receiving the house should be compensated for the equity in the house. By “equity” we mean the difference between the value of the home and the amount owed in mortgages against the property.
For example, if the first mortgage is $50,000.00 and the second mortgage from a home equity loan is $10,000.00, the total debt owed against the house is $60,000.00. If your home is valued at $200,000.00, the equity in your home is $140,000.00 (the $200,000.00 value less the $60,000.00 in mortgages equals $140,000.00 in equity).
If one of the parties remains in the home, the issue of how to give the other party his or her share of the equity must be considered.
If your home is sold, the equity in the home will most likely be divided at the time of the sale, after the costs of the sale have been paid.
If either you or your spouse is awarded the house, there are a number of options for the other party being compensated for his or her share of the equity in the marital home. These could include:
- The spouse who does not receive the house receives other assets (for example, retirement funds or a stock account) to compensate for the value of the equity.
- The person who remains in the home agrees to refinance the home at some future date and to pay the other party his or her share of the equity.
- The parties agree for the property to be sold at a future date, or upon the happening of a certain event such as the youngest child completing high school or the remarriage of the party retaining the home. The parties then split the sales proceeds.
As the residence is often among the most valuable assets considered in a divorce, it is important that you and your attorney discuss the details of its disposition. These include:
- Appraisal of the property;
- Refinancing to remove a party from liability for the mortgage;
- The dates on which certain actions should be taken, such as listing the home for sale;
- The real estate agent;
- Costs of preparing the home for sale; and
- Making mortgage payments.
If you and your spouse do not agree regarding which of you will remain in the home, the court will decide who keeps it or may order the sale of the property.