Clients often wonder what will happen to their marital home and other real estate after divorce. Spouses can always reach an agreement on the division of property, and in most cases courts will accept the agreement. However, if the parties are unable to reach an agreement, the first consideration is whether the home is considered marital property. Generally, marital property is defined as property acquired during the marriage with the exceptions of property obtained via inheritance or as a gift. This is usually the case regardless of whose name the property is titled. However, it should be noted that determining whether a home is marital property can become rather complicated. For example, a property acquired by one spouse before the marriage may have a portion of its value deemed marital property because the other spouse made mortgage payments or paid for home improvements. Potential clients concerned about whether property is considered separate or part of the marital estate should consult with an experienced attorney. If either a home or a portion of its value is determined to be marital property, then it will be divided equitably. It should be noted that “equitably” does not necessarily mean equally.
OPTIONS FOR THE EQUITABLE DIVISION OF THE MARITAL HOME:
- Sell the Home: Spouses can agree or the court will decide on how any proceeds from the sale of the home will be divided among the spouses.
- One Spouse Is Awarded the Home Permanently: In this situation, the other spouse must transfer his/her interest in the property to the spouse who is awarded the home. The spouse who is awarded the property may have to buy out the other spouse or refinance the mortgage loan so that it is in his/her name only. It should be noted that just because a party’s name is removed from the title of the home does not mean he/she is no longer responsible for the mortgage if it is in both spouse’s names. Until the spouse who was granted the home refinances the joint mortgage loan so that it is no longer in the transferring spouse’s name, both spouses will continue to be jointly responsible for the mortgage payments. This means if the spouse who was awarded the property defaults on the loan prior to refinancing, the transferring spouse’s credit will be negatively affected as well. That is why with this option it is important to consider whether the spouse who is awarded the home has the credit rating required to refinance the mortgage and for there to be a set time frame for the refinance of the property.
- One Spouse Is Awarded Exclusive Use of the Home For a Specified Period of Time: A common example of this option is when the spouse who gets custody of the children is allowed to reside in the home with the children until the youngest child graduates high school. The spouse who is granted exclusive use of the home may be held responsible for the mortgage payments and household expenses during the specified period of time, or the other spouse may be required to contribute to these expenses. Once the specified period of time ends, the property is either sold or awarded to one spouse permanently as discussed in (1) and (2) above.
Figuring out what will happen with your home after divorce is an important consideration that often requires sound legal advice. If you’re considering filing for divorce, contact The Faucette Law Firm at (770) 485-6620.