Deciding who gets the house in a divorce can be a complex and emotional decision. This article can help couples sort through the issues and arrive at the best solution for their circumstances in their divorce settlement.
Table of Contents
- Why Deciding Who Gets the House in a Divorce is so Difficult
- Who Determines Who Gets the House in a Divorce?
- Do You Live in a Community Property or Equitable Distribution State?
- Do You Want the House After the Divorce?
- Who Gets the House if a Judge Makes the Decision?
- 3 Choices That Determine Who Gets the House in a Divorce
Why Deciding Who Gets the House in a Divorce is so Difficult?
Most couples ending their marriage will be forced into making a difficult decision about who gets the house in a divorce. To begin with, the size of this marital asset is often the largest financial asset in a marriage.
Then, there’s the inevitable emotional attachment to what used to be a “home” to both of you. In many cases you will have raised children there and the emotional attachment and feelings of security are strongly tied to the home. This becomes especially important when it feels as though your world is being turned upside down with other changes.
Other factors that may come into play are local contacts such as friends, relatives, churches, schools, childcare, gyms or recreational activities etc.
Who Determines Who Gets the House in a Divorce?
Hopefully, you and your spouse can come to an agreement on who, if anyone, should keep the home after the divorce. You may decide neither of you will. In this case, you and your spouse would make the decision about who gets the house after the divorce. Learn more at Negotiating Your Divorce Settlement.
If you can reach an agreement on a division of marital assets such as property, child custody, and other divorce related issues, you can establish your own divorce settlement. You could then proceed with an uncontested divorce. This method is typically less costly, less stressful and results in a better outcome for both of you.
If a couple can’t agree on who gets the house in the property settlement, then the case goes to trial and a judge will decide in court. In this case you will be at the mercy of a judge that doesn’t know or care about you or your circumstances. State laws, the judge’s personality, and any biases they may have against you or your lawyer, become factors in settling any unresolved division issues in court.
In this case, you will want to find out How to Find the Best Divorce Attorney to help you litigate your case.
Do You Live in a Community Property or Equitable Distribution State?
Find out whether you live in a Community Property or an Equitable Distribution state.
In a Community Property state, marital property is divided 50/50. So, if one spouse gets the house with $30,000 of equity in it, the other party would need to receive $30,000 of cash other marital property (as a buy-out for their half of the equity).
In an Equitable Distribution state, marital property is divided fairly between the two parties but not always equally. One spouse may get the house while the other gets marital property that’s slightly more or less in value if there’s an income disparity between them.
Also, determine whether the house would be legally considered Separate or Marital property. When a divorce occurs, each spouse usually gets to keep their own separate property when the division occurs. This is any property they brought into the marriage and kept separate during the time they were married. The key is keeping the home separate.
Keep in mind that if one person owns the house before the marriage but the other helps fix it up or contributes to mortgage payments during the marriage, then the house may legally be considered marital property that will be divided up in a divorce settlement.
Do You Want the House After the Divorce?
One of the most difficult aspects of a divorce can be the splitting of your combined assets. Especially your home. Understanding your options and their potential impact will help a great deal in arriving at the best solution for your circumstances when you dividing marital property.
First you need to decide who if anyone wants to keep the house after the divorce. Sometimes neither party wishes to stay in the home because of unpleasant memories. But most of the time, one or both partners wish to keep the house after a divorce. Especially if they’ve raised children there.
The greatest single consideration when deciding who gets the home in a divorce is finances. Can either of you afford to keep the home with a single income instead of double (if both you and your spouse earn an income)?
Other important factors in this decision may include not wanting to disrupt your children’s life and environment any more than you have to as you make this change. Having local contacts such as friends, family, churches, schools, childcare, gyms or recreational activities in the area of your current home can also influence your decision.
If you’re unable to come to an agreement, a judge will decide which party (if any) will stay in the house.
Who Gets the House if a Judge Makes the Decision?
When only one spouse wants the house, then deciding who gets the house in a divorce is simply a math equation. If there are enough other assets to cover the other spouse’s 50% share of marital property, then the spouse who wants the house can usually have it.
If both spouses want the house, then the judge must consider other factors in the marriage such as:
- Whether either or both spouses can afford to keep the home independently
- Will either spouse have primary custody of their children (it may make sense to keep the children in the home to cause less disruption in their lives)
- Which spouse is paying the home expenses at the time of the divorce (This last factor is referred to as Status Quo. Most couples have no idea that this is a factor.)
If neither spouse wants the house, then the court will likely order the home sold and the couple can split the net proceeds. The court will often order the house to be sold if there isn’t enough other assets for one spouse to buy the other’s equity in the home.
3 Choices That Determine Who Gets the House in a Divorce
Here are the 3 fundamental choices as it relates to your home and mortgage. It is critical to fully understand the ramifications of each of these 3 choices, before making a decision.
- Sell the house and split the profits
- Buy the house from your spouse
- Sell your equity in the house to your spouse
Sell the home and split the profits
If you decide to sell the home and split the profits, the primary goal is to sell the home as quickly as possible for as much as you can reasonably get, considering your circumstances. And you MUST consider your circumstances. Here are a couple of reasons why.
If it takes a long time to sell, will you both live there, even though you’re going through or have just completed a divorce? That may make financial sense but it’s hard to do in the real world when intense emotions are involved.
There’s usually an extremely negative atmosphere in a home where two people wish to be apart, especially after the attorneys get through with you.
In this case, it’s probably wise for one of you to make other temporary arrangements while the house is for sale. But be sure to check with an attorney to make certain that this won’t adversely affect your parenting or financial settlement before doing so.
This also means that you should price the home reasonably, not expecting top dollar unless you can financially and emotionally afford to wait for a great offer on your home.
Remember that in the end the profits may not be equally divided. Factors that may influence the split include the terms of your settlement, the original source of the down payment, and the property laws in your area. Also, retirement accounts and other assets will figure into the total settlement and that will be a part of the equation.
Buy the house from your spouse
If you want to buy the house from your spouse, you need to consider the income of your new household. Are you dropping from two salaries to one? Are you able to afford a similar monthly mortgage payment by yourself?
If the home becomes an unmanageable financial burden, you may not want to keep it. Or, if you have to give up too many other liquid assets to keep the house, it may financially cripple you for years to come.
Also, if the original mortgage is in both of your names, then you face the challenge of refinancing it on your own merit. That means your credit history, job history and debt to income ratio will come into play. You may want to speak with a lender to see if you would qualify for a new mortgage before deciding to buy the house from your partner.
Sell your equity to your spouse
Selling the equity to your spouse should provide you with funds to find another place to live. How much will depend on the equity in your home after real estate commissions. There may also be tax implications that you will need to be aware of.
Make certain that you DO NOT remain on the old mortgage or title if you were on it. If that isn’t done you may remain liable for any late payments (ruining your credit), back taxes, or any liability incurred with the house in the future.
If you found this article to be helpful, please forward it to other friends and family that may need the same information. Splitting assets properly and equitably can be a very difficult and emotional task.
Determining who gets the house in a divorce is a complex issue. This topic and many others are