When two people decide to get married, they typically don’t plan to divorce at a later date. It’s totally understandable, because in most people’s eyes, a marriage is a commitment, a declaration of your intent to be together forever.
Over the course of a marriage, the two spouses buy a variety of possessions together, often including a home. In the event of a divorce, it becomes necessary to divide these possessions fairly between the two. For most possessions, this is a relatively simple process, if not a pleasant one. A home is a big, stationary object, and is likely going to be the most expensive thing the couple owns. Dividing it fairly is not as easy as cutting it down the middle and giving half to each person. At this point, the couple has a few options.
One Spouse Buys Out the Other
Sometimes, one spouse—often the one taking custody of the children—will want to keep the house. They may want to keep it for sentimental reasons, or they may not want to deal with the hassle of moving. Often, it serves as a point of continuity after a difficult upheaval, and staying in the same home means that the kids will stay in the same school system.
When one person wants to keep the house and the other wants to sell, the person staying typically “buys out” the other person’s share in the home. This allows the divorcing couple to have a cleaner break, without the lingering attachment that owning a home together brings. Typically, to make this happen, the person staying in the home will refinance the mortgage solely in their own name.
The Couple Continues to Own the Home Together
It may seem odd, but there are circumstances where a divorcing couple will choose to continue to co-own the home. There are risks and benefits to this arrangement. Often, there will be an agreement that, by some pre-determined date, the person staying in the home will have either sold the home or purchased it outright. One of the more common situations for this type of arrangement is when there are children involved and the parents don’t want to uproot them. In this situation, the date by which the sale should take place is on or near the child’s 18th birthday.
For this type of arrangement to work, both spouses should understand that this is a completely new business relationship rather than an extension of their previous relationship. Until the mortgage is paid off, the full amount of the loan will appear on both parties’ credit reports. There is a lot of risk involved in this type of an arrangement because it creates another tie between two people who have already decided they don’t work well together.
The Couple Sells the Home
Just selling the home and paying off the mortgage is usually the simplest solution. It allows both people to put the debt behind them and move on with their lives. If neither spouse wants to keep the home, or neither can afford it on their own,
There are several factors for the former couple to keep in mind if they decide to sell the home. They need to decide on an asking price that will be fair to both parties. They need to prepare the house to show. If one of them is still living in the home, it will be that person’s responsibility to make sure the house is clean and prepared for showing. They need to decide who will be responsible for the minor repairs that are always necessary before selling a home. If one of them is maintaining it, will they be compensated for that out of the profits?
It’s wise to work with an attorney who is familiar with local divorce laws and real estate codes, because each state has its own requirements. Whether you are looking for divorce lawyers in Utah or child custody attorneys in New Hampshire, make sure your attorney is familiar with the local regulations.
If, after the separation, one person has been responsible for continuing to make the mortgage payments, then that should be taken into account when determining how to divide the proceeds from the sale of the home. The same is true of any improvements that have been made.
A home is a big asset that can make the financial aspects of a divorce more complicated. It’s important for divorcing couples to determine how they intend to handle the home and other real estate the couple owns together. Divorce is already difficult. There’s no need to make it more so.
