Divorce. When we first fall in love we can’t imagine a marriage ending in divorce, but it’s also sadly a common reality. The American Psychological Association puts the rate of divorce for citizens of the United States at approximately 40 to 50% for first marriages. But what happens to shared assets, such as real estate, when a marriage ends? Do you have to split all assets 50/50?
Can You Divorce Without Selling the House?
You have options when it comes to keeping a house during the divorce or selling it to split 50/50. The first step is letting your lawyers and the Court know the date you acquired the house. This important piece of information can help decide whether the house will need to be sold and the assets divided equitably, or if the house is not considered a marital property.
If the Court decides the property is a “separate property” – i.e. purchased before the marriage, gifted or inherited to you as an individual, or purchased with separate assets by you at any time – in both community and equitable distribution states, the spouse has no rights to this property. There may be some exceptions to this, such as in a case where the property was updated in a way that added to the overall value of the house. A lawyer will be able to help you decide whether a property is considered separate or a marital asset.
A court will look at several factors to decide who gets the house, including:
The value of the property.
The financial circumstances of each partner.
The employability of each partner.
Both physical and monetary contributions to the marital home.
The age and physical and mental health of each partner.
The amount of time each partner will have custody of the children.
Who Gets the House in a Divorce?
Dividing assets during a divorce can be one of the most contentious and emotionally charged aspects of the process. One of the biggest and most valuable assets in many marriages is the marital home. Determining who gets the house—or whether it’s sold altogether—depends on several factors, including state laws, individual circumstances, and the agreements reached during the divorce proceedings.
State Laws: Equitable Distribution vs. Community Property
The legal framework for dividing marital assets, including the home, varies depending on the state. Each state has its own laws, but they generally fall into one of two categories: equitable distribution or community property.
Equitable Distribution
Most states in the U.S. follow the principle of equitable distribution. Under this framework, marital assets are divided in a way that the court deems fair, which doesn’t necessarily mean a 50/50 split. The court may consider various factors, such as:
• Each spouse’s financial contributions to the marriage.
• Non-monetary contributions, like child-rearing or homemaking.
• The length of the marriage.
• Each spouse’s financial needs and earning potential post-divorce.
• Whether one spouse will have primary custody of the children.
Because equitable distribution prioritizes fairness over equality, the decision of who gets the house may hinge on individual circumstances and the court’s judgment.
Community Property
Nine states operate under community property laws:
• Arizona
• California
• Idaho
• Louisiana
• Nevada
• New Mexico
• Texas
• Washington
• Wisconsin
In these states, any property acquired during the marriage is considered jointly owned and is divided equally upon divorce. However, property owned by one spouse before the marriage or acquired via inheritance or gifts is typically excluded from division.
Alaska has optional community property laws, allowing couples to choose this method of dividing assets if they wish.
If you live in a community property state, your home—if purchased during the marriage—is likely considered a marital asset and will be split 50/50 unless both parties agree otherwise or there are exceptions, such as a prenuptial agreement.
Options for Dividing the Marital Home
When it comes to the family home, there are several options available to divorcing couples. The decision may depend on factors like financial feasibility, custody arrangements, and personal preferences.
1. One Spouse Buys Out the Other
One of the most common resolutions is for one spouse to retain ownership of the home by buying out the other spouse’s interest. This option allows the remaining spouse to maintain stability, especially if they have children who would benefit from staying in the home.
To buy out the other spouse, the retaining spouse must:
• Determine the home’s current market value (often through an appraisal).
• Calculate the other spouse’s share of the equity.
• Secure the funds to pay the other spouse their share.
For example, if a couple owns a home worth $400,000 with $200,000 in remaining mortgage debt, the home’s equity is $200,000. In a community property state, each spouse would typically be entitled to $100,000. The spouse keeping the home would need to pay the other $100,000 (or negotiate a different settlement) and refinance the mortgage to remove the other spouse’s name.
2. Use and Occupancy Until the Youngest Child Turns 18
In cases where children are involved, courts may prioritize their well-being by allowing the custodial parent to remain in the home until the youngest child reaches adulthood. This arrangement provides stability for the children but can complicate the division of assets.
Under this option:
• The court may specify which spouse will be responsible for paying the mortgage, property taxes, and maintenance expenses during the use-and-occupancy period.
• Once the children turn 18, the home is typically sold, and the proceeds are divided between the spouses.
This solution works best when both spouses can agree on the terms of the arrangement and trust each other to uphold their financial obligations.
3. Co-Owning the Home Post-Divorce
In some cases, divorcing couples choose to continue co-owning the home, even after the divorce is finalized. While this option is less common, it can be a practical solution for couples who want to maintain stability for their children or who cannot afford to sell or buy out the other’s interest immediately.
Pros of Co-Owning:
• Allows children to remain in the family home.
• Avoids immediate sale during a down housing market.
Cons of Co-Owning:
• Requires ongoing communication and cooperation between ex-spouses.
• Financial risks if one spouse fails to make payments.
• Prolongs financial entanglement, making it harder to move on.
For this arrangement to work, both parties must establish clear terms regarding financial responsibilities, repairs, and the eventual sale of the home.
4. Selling the House and Dividing the Proceeds
Selling the marital home is often the simplest and most straightforward solution, especially if neither spouse can afford to buy out the other or continue paying the mortgage alone. The house is put on the market, and the net proceeds (after paying off the mortgage and any selling costs) are divided according to the divorce agreement or court order.
Steps in Selling the Home During Divorce:
1. Agree on a real estate agent and listing price.
2. Prepare the home for sale (if necessary).
3. Divide the proceeds based on the court’s ruling or mutual agreement.
This option allows both spouses to start fresh financially and eliminates the need for future negotiations regarding the property.
Factors That Influence Who Gets the House
The decision of who gets the house—or whether it’s sold—depends on various factors, including:
1. Custody of Children
Courts often prioritize the needs of children in divorce cases. If one spouse is granted primary custody, they may be allowed to remain in the home to provide stability for the children.
2. Financial Ability to Maintain the Home
Keeping the home requires financial resources, including the ability to pay the mortgage, property taxes, insurance, and maintenance costs. If one spouse cannot afford these expenses on their own, the court may order the sale of the home.
3. Emotional Attachment
While emotional attachment to the family home is understandable, courts prioritize practical and financial considerations. If both spouses want to keep the home, they may need to negotiate or let the court decide.
4. Pre-Marital or Separate Property
If one spouse owned the home before the marriage or inherited it during the marriage, it may be considered separate property and excluded from division. However, if marital funds were used to pay the mortgage or make improvements, the other spouse may be entitled to a portion of the equity.
5. Prenuptial or Postnuptial Agreements
A valid prenuptial or postnuptial agreement can significantly impact the division of assets, including the marital home. If the agreement specifies who gets the house in the event of a divorce, the court will typically enforce it.
Special Considerations
Refinancing the Mortgage
If one spouse is keeping the house, they will likely need to refinance the mortgage in their name. This ensures the other spouse is no longer financially tied to the property. Refinancing can be challenging if the remaining spouse has limited income or credit issues.
Tax Implications
Selling the marital home can have tax consequences, especially if there are significant capital gains. However, the IRS allows an exclusion of up to $250,000 ($500,000 for married couples) in capital gains on the sale of a primary residence, provided certain criteria are met.
Housing Market Conditions
The state of the housing market can influence the decision to sell or keep the home. In a hot market, selling may yield higher proceeds, while in a sluggish market, it might be better to wait.
Conclusion
Determining who gets the house in a divorce is a complex process influenced by state laws, financial considerations, and personal circumstances. Whether one spouse keeps the home, both co-own it temporarily, or the property is sold outright, the goal is to find a solution that aligns with the best interests of all parties involved.
It’s essential to work with experienced professionals, including attorneys, financial advisors, and real estate agents, to navigate this challenging process and make informed decisions.
Selling Your House During A Divorce?
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Steps to Sell a Home During Divorce
Selling a marital home during a divorce can be challenging, both emotionally and logistically. Proper planning and professional guidance can help streamline the process and minimize disputes. Here’s a step-by-step guide to navigate the sale effectively:
1. Hire a Divorce Specialist Real Estate Agent
The first step is finding a qualified real estate agent who specializes in handling sales during divorces. These professionals understand the unique challenges involved and can help mediate disagreements between spouses to ensure a smooth transaction.
Key considerations:
• Look for an agent with experience in divorce-related sales.
• Ensure they remain neutral and prioritize the sale’s success over either party’s interests.
• The agent can help provide an unbiased valuation of the property, ensuring fairness in the division of assets.
2. Agree on Home Sale Specifics
Both spouses need to come to an agreement on the terms of the sale. This is a critical step that can prevent future disputes and delays.
Decisions to make include:
• Timing of the Sale:
• Should the house be sold quickly, or is it worth investing time and money in repairs to maximize its market value?
• Repairs and Upgrades:
• If the house needs work, decide how to split the costs of repairs.
• Agree on how the investment will impact the division of profits.
Additional specifics to decide:
• Which real estate agent to use.
• The asking price and negotiation strategy.
• Who will live in the house (if anyone) until it’s sold.
• Who is responsible for ongoing costs, including the mortgage, utilities, and maintenance.
• How to handle open houses and showings (e.g., keeping the home presentable).
Tip: Finalize these agreements through your attorneys to avoid misunderstandings or financial complications. Court involvement should be a last resort, as it can be time-consuming and expensive.
3. Know What to Expect During the Sale
The sale process can be emotionally charged, especially when it comes to reviewing offers and negotiating terms. Keeping emotions in check is crucial to making rational, financially sound decisions.
Key steps in this phase:
• Review Offers Together: Work collaboratively (or through your attorneys) to evaluate offers from buyers.
• Agree on a Strategy: Before listing the home, establish criteria for selecting an offer. For example:
• Accepting the highest offer.
• Prioritizing buyers with fewer contingencies for a faster close.
• Rely on Your Professionals: Use your real estate agent and attorneys as mediators if disagreements arise.
4. Divide the Proceeds
Once the home is sold, the final step is dividing the proceeds. This process should be straightforward if agreements have already been made during the divorce settlement.
Key considerations:
• Any outstanding liens, debts, or obligations tied to the property (e.g., unpaid taxes, HOA fees) will be paid off during escrow.
• The net proceeds will then be divided according to the terms of your divorce agreement or court order.
• Ensure clarity on how the funds will be distributed (e.g., through escrow or directly to each party).
5. Alternative Option: Sell Your House As-Is to a Cash Buyer
If time, financial constraints, or emotional stress are significant concerns, selling the house as-is to a cash buyer might be the best solution.
Benefits of Selling to a Cash Buyer:
• Fast Closing: Cash buyers can close within days or weeks, allowing both parties to move on quickly.
• No Repairs Needed: Cash buyers purchase homes in their current condition, saving time and money on upgrades or repairs.
• Fewer Complications: A direct sale eliminates the need for ongoing negotiations, showings, and the involvement of a real estate agent.
How It Works:
1. Contact a reputable investor or direct home buyer.
2. Receive a no-obligation cash offer.
3. Close on the sale quickly, typically within a few days.
This option is ideal for couples who want a fast, hassle-free resolution or are unable to cooperate on traditional sale terms.
Final Thoughts
Selling a home during a divorce is rarely easy, but with clear communication, professional guidance, and a willingness to compromise, it can be managed effectively. Whether you choose to work with a divorce-specialist real estate agent or opt for a cash sale, the goal is to find a solution that allows both parties to move forward with minimal stress and financial loss.
Selling Your House During a Divorce? Get a Hassle-Free Cash Offer Today!
At Stage 94 Real Estate, we specialize in helping homeowners navigate the complexities of selling their homes during a divorce. As a trusted local house-buying company, we offer competitive cash offers for properties in any condition—saving you the stress and expense of traditional home sales.
Why Sell to Us?
• Fast Closings: Need to move on quickly? We can close in as little as a few days.
• No Repairs or Cleaning Needed: We buy houses as-is, no matter the condition.
• No Fees or Commissions: Skip the agent fees and keep more of your money.
• Stress-Free Process: Avoid the headaches of showings, negotiations, and drawn-out closings.
Divorce is Stressful—Selling Your Home Doesn’t Have to Be
Whether your house is in pristine shape or needs significant repairs, we make selling during a divorce simple and straightforward. Once you accept our fair cash offer, we’ll handle everything from start to finish, including any necessary repairs or upgrades.
Ready to Sell Your House Fast?
Contact us day or night at 866-739-3110 to get started. Our experienced team is here to guide you through the process and provide a solution tailored to your unique situation.
Don’t let the stress of selling your home add to the challenges of divorce. Reach out today to get a fair, no-obligation cash offer and take the next step toward a fresh start.
Stage 94 Real Estate
Your trusted local house-buying solution.