In many divorce cases, the couple’s real estate is the most valuable asset. There are often a number of options available to couples.
The first question regarding the sale of the home is how the property is owned. If it is separate property, the spouse who owns it may be able to sell it without requiring permission from the spouse who does not have an ownership interest in the house. If the property is owned as tenants in common, either spouse can freely sell his or her own interest in the home. However, most property that is sold to a married couple is deeded as joint tenants with the right of survivorship or tenants by the entirety, which will typically require the parties to agree on how to dispose of the property or a court order.
Automatic Temporary Restraining Orders
Some states have automatic temporary restraining orders that prohibit spouses from being able to sell property during divorce until the court issues an order to modify this requirement. Sometimes these orders concern separate property as well as marital property. However, some may only concern marital property. It is important for spouses to consult with a family law lawyer in their jurisdiction before taking any action that may be prohibited by the court. A lawyer can also help seek an order so that the party will be able to legally sell the home.
Agreement by the Parties
The parties may reach an agreement regarding how to dispose of the property through communicating with each other, negotiating through their respective lawyers or through the process of mediation.
Keeping the Property
If the parties agree to allow one spouse to keep the property, the other spouse may be entitled to half of the equity in the home or another proportion depending on the agreement of the parties, when the property was acquired and the source of the funds used to purchase the property. The parties may agree that one spouse should keep the property because he or she will be the party primarily responsible for the parent. They may decide to keep the property until the youngest child reaches a certain age and then sell the property. They may agree that the market is not in a good position and will agree to wait to sell the property until a date in the future when the market will have hopefully recovered.
If one party keeps the property, the usual result is that he or she must try to refinance the home into just his or her own name. This allows the other party to walk away from the property without any future financial liability for it. Additionally, the other party’s name may be removed from the deed so that he or she does not have a legal right to the property. The ability to refinance the property may be affected by the parties’ credit rating or lower income if both incomes were initially used to qualify for the mortgage.
Selling the Property
If the couple agrees to sell the property, the process is similar to selling a property when the parties are not going through divorce. They put the house on the market and try to get the best possible price for it. They may be in disagreement regarding the listing price, but an appraiser or real estate agent may help them determine the likely price that the home may be listed for. If the property is sold, the couple will first have to pay off any amounts owed on the property, such as a mortgage and home equity loan. Additionally, if the house has appreciated, the couple may have capital gains tax to pay on it. Any closing costs and brokers’ fees will also need to be paid. Selling the property offers the advantage of the parties being able to liquefy an expensive asset and split the proceeds.
If the parties are not able to reach an agreement related to the house or how to divide the marital property, they may litigate the issue in front of a judge who is tasked with deciding what is fair under the circumstances and in line with state law. The judge may issue an order to sell the home, to refinance the property, to maintain the home as is for a certain duration or to take other action related to the home.
A family law lawyer can assist each party to try to determine a fair way to handle the real estate that they own.