Divorcing does not require immediate sale of the marital home. There are many options that the parties may agree on, or that the court may order, to deal with the marital home.
Who keeps the home in a divorce?
The first question to be examined is if either party is planning on keeping the marital home after the divorce? If the answer is yes, then the party that would like to keep the home needs to analyze their income and expenses to determine whether keeping the home is a financially feasible option.
If one party does plan on keeping the marital home and is financially able to do so, then he or she needs to “buy out” the other party’s interest in the marital home if there is equity in the home – which is where we get into the topic of payments.
How are home payments handled after a divorce?
Equity is the value of the real property less any liability secured by the real property. For example, if the parties have an equal share in a $100,000.00 of equity home and the Wife plans on keeping the home, the Wife needs to pay to the Husband $50,000.00 for his share of the marital home.
Typically, when one party takes the marital home, that party also takes on any debt secured by that real property. The amount necessary to buy out one party’s interest in the home may be made in several payments over time, through a transfer of assets such as funds available in a financial account or retirement account, or through a transfer of liabilities such as taking over the obligation for credit card debt.
One of the largest problems with this scenario is that the party remaining in the home is unable to refinance the mortgage. This means that the other party technically remains liable for the mortgage on the marital home, which many find complex and unfair.
When do you sell a home in a divorce?
If neither party wants to keep the marital home or neither party is able to keep up with the required equity payments, then the parties may agree to list the home for sale. There are even additional terms that divorce parties can agree on if the home is not selling.
For example, the parties may agree on a real estate agent, and agree that for every 3 months that the marital home does not sell, the parties will agree to reduce the listing price as recommended by the real estate agent. Once the home sells, the proceeds from the sale of the home should pay off all debt secured by the home and any net proceeds should then be divided between the parties.
The parties may also agree that one party will live in the marital home during the time that the home is listed for sale, and pay living expenses for the house.
What are my other options?
Lastly, if neither party wants to keep the marital home, neither party is in a financial position to keep the marital home, or there is no equity in the home, then the parties may want to consider options such as a “short sale” or a “deed in lieu of foreclosure.” With options such as short sale and deed in lieu, negotiations with the mortgage company may allow the parties to get rid of the marital home and either most or all of the liability secured by the marital home.
Handling A House In A Divorce Case
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