What to Do with the House During a Divorce

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What to Do with the House During a Divorce
Written By: Josh Lowell ~ 8/16/2020

The ultimate purpose of a divorce is to separate assets and debts (and time with children) so that two previously intertwined parties can live apart. Many times, the family home may be the only substantial asset that is titled in both parties’ names. From a practical perspective, dividing the family home may be the most complicated (and often most emotional) part of the divorce process. There are several options for dealing with real property during a divorce or legal separation.

1. Selling the Home Pending Divorce

If both parties agree that the home needs to be sold, there is no rule or law that prevents the parties from selling their family residence. Typically, putting the house on the market during the divorce requires substantial cooperation of the parties. Often, this method is most utilized where the parties do not have children and when the dissolution is otherwise amicable. Best practice would have both parties (with the help of their attorneys) sign a written sale contract outlining the terms of the sale process so both parties are on the same page.

2. Selling the Home After Divorce

This is another common scenario where neither parent has children. Perhaps the parties have a more difficult time coming to terms on the sale, or maybe cash from the home sale is not as necessary. Whatever the reason, selling the marital residence after the divorce has been finalized is commonplace especially in short term marriages or for marriages where there are not other substantial community assets.

3. Cashing Out the Home’s Equity through Refinance

If a party wants to stay in the home, then they are often expected to “buy out” their spouse’s share of the property’s equity. This might be a substantial transaction if the mortgage has been paid down substantial over the length of the marriage. In these cases, refinancing the home in one spouse’s name may be the best option. Perhaps there is $400,000 in equity, which means each spouse is entitled to community property of $200,000. If Spouse A wants to keep the home, they may need to refinance the property for more than $200,000 to provide a lump sum payment to Spouse B.

4. Anything… As Long as the Parties Agree

Here’s the thing about divorces and legal separations. Allocating and distributing community property is often more a practice of creative thinking than following set rules. If spouses agree that a certain method of dealing with property – including homes – will work for them, then it is on the attorneys to help draft an agreement that matches the parties’ intent. Maybe that means both parties staying on the title to the home and renting out the property for additional income. Maybe that means both parties staying in the home for the benefit of the child. Maybe that means allowing one spouse to stay in the home paying rent or accruing a more long-term equity buy out to the other spouse on sale of the property. Whatever you can think of, your attorney can help codify.
If you and your spouse are considering divorce, dealing with the house and other personal property is immensely important.

Hiring the right attorney can make a world of difference to ensure that your goals are met. The experienced litigators at the Law Offices of Magnuson Lowell, P.S. work creatively to help identify potential options that may make divorce more palatable. Call today for a free case evaluation.


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