What happens to my house in a divorce?
A family's residence can oftentimes be one of the more valuable assets in their estate. Unfortunately, it is not advisable for the entire family to continue residing in the house in the event of a divorce. This begs the question, which spouse gets to keep the residence?
There is no "one way" to address the marital residence when going through a divorce. It depends upon a variety of factors including, if the house can be sold, how either spouse will buy out the other spouse's interest in the residence, and if there are children involved, their ages, the parenting schedule and where they will go to school.
If the fair market value of the home far exceeds the outstanding balance on the mortgage, then there is a larger amount of net equity to be shared between the parties. If one spouse wants to stay in the residence, it is likely (but not always a certainty) that the other spouse will need to be bought out of his or her percentage share of the net equity within a specified period of time. The percentage amount to be bought out and the time in which the buy out will occur depends on the value of the overall estate, and other financial factors in the case. If a buy out is not possible by either spouse, then selling the residence is another practical option. In some instances, when a house cannot be sold due to market conditions, ex-spouses can become landlords to renters that live in the former marital residence after the divorce but that alternative is very fact specific, requires detailed agreements, and is not always a viable option.
The costs of maintaining the residence on a monthly basis is an important factor to consider when weighing different options. As a part of the representation of our client's best interests, Alexander Law assesses the expenses of the home, our client's net income, and whether support received from the other party will provide sufficient funds to pay the expenses of the residence. Expenses do not just include mortgage, taxes, and insurance, but also landscaping, maintenance, and major repairs. More often, it is the cost of potential major repairs and maintenance that are the deciding factor on whether one spouse can financially sustain the burden of the residence. It is important that your financial stability is not jeopardized when choosing to stay in the residence.
If one spouse contributed funds that he or she had before the marriage (referred to as non-marital or pre-marital funds) into the acquisition of the marital residence, or for major repairs during the marriage, there can oftentimes be a claim of reimbursement to the spouse's non-marital funds. The right to reimbursement is not an automatic right, and whether a court is inclined to reimburse one party depends upon documentation to prove the reimbursement claim, as well as other factors that may exist in the case.
When there are children involved, the parents can agree that one parent will stay in the residence with the children while they are minors until such time as they graduate high school (or some other intentional deadline related to the children). Thereafter, the house can be sold and the proceeds divided between the parties. This arrangement can work well provided that each party is able to wait a period of time for the net sale proceeds, and assuming that either party's credit is not negatively impacted by the continued joint ownership of the residence in the meantime.
Alexander Law understands that the residence is not just a pile of bricks or a bundle of cash. It provides comfort for children, a sense of security during an otherwise stressful chapter in life, and the net equity is not something to be overlooked. Varying circumstances and facts require creative problem solving in settlement or well-reasoned arguments before a Judge when addressing the financial impact related to the home and the needs of either party and the minor children, if any. Alexander Law acts to ensure that client's understand their rights and options before committing to a path related to their home during the course of a case.
