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What Happens to My House in a Divorce?

Many divorcing couples wonder about the division of property when they own a home or maybe more than one home.  What do you do with the house?  There are typically three options.  The first is for you to keep the home; the second possibility is for your wife to keep the home, and the third choice is to sell the home and split the proceeds, if any. 

In the first scenario where you keep the house, it typically means that you continue to live in the house, or you both continue to live together during the divorce.  Once the divorce is final, if not sooner, your wife would move out.  Assuming there are no other issues with property division, you then owe your wife half of the marital equity in the house. 

The equity is defined as the value of the house minus the mortgage and any other debt on the house.  So if you both agree that the house is worth $300,000 and you owe $250,000, there is $50,000 equity, so you owe your wife $25,000 for her share of the house.  This is considered a “buy-out” of your wife’s half of the family home. This can be in the form of trade-offs for other property, assets, income or a smaller share of the joint debts. 

This scenario can raise some other issues, one of which is the value of the house itself.  If you cannot agree on the value or don’t know the value, you can agree to have an appraisal done to determine the value of the home.  Another issue is the terms of the buy-out, such as how soon do you have to pay the money.  Those types of matters are negotiable, but typically if you are keeping the house you are expected to do the buy-out within a few months of the divorce being final to allow the time it takes to complete a refinance of the mortgage and borrow the money for a buy-out.

The second scenario is that your wife keeps the house and pays you for your half of the equity.  A concern here is that you need to be sure the mortgage is going to be refinanced to remove your name from the debt.  You will not want to remain on the mortgage on a house that you no longer own.  There are exceptions, including situations where the debt is higher than the value of the house, or your wife may be unable to refinance the mortgage for other reasons, and those issues cause their own unique problems.

The third scenario with a house in a divorce is that you and your wife agree to sell the home and split the equity. The divorce settlement quite often details the home sale specifics such as a timeline for listing, responsibility for maintaining the property, agreed upon price and real estate agent.  Occasionally, the couple agrees to put the home up for sale before the divorce is final.  The timing of the sale of the home and the timing of the divorce being completed are not necessarily tied to each other, so one can be completed before the other.

If the decision is to sell the home, there are other considerations.  While both parties are still living in the home, there is accountability for its maintenance and cleanliness. Sometimes when one spouse moves out during or after divorce, the spouse that remains in the home may benefit from prolonging the marketing process or even sabotaging the sale. Completing the sale while both parties are still living in the house ensures that both are taking good care of the shared asset.  If you are moving out and leaving the day to day care and maintenance of the home to your wife, you need to be sure there are the right restrictions in place to protect you and your asset.  This can be done through a court order while your divorce is pending.

            Other considerations in the sale of a home might include the work, renovations or repair necessary to prepare the house for sale, and how those costs will be paid.  You should also consider the timing of the real estate market, and whether it’s better to sell the home in January or June, for example.  Any details agreed upon in a divorce for the sale of the house need to be kept private, and not included in your divorce judgment.  This can be done with the proper advice from your divorce attorney.

            There are many options for what happens to a house in a divorce case, and your divorce attorney can explore those options with you.  The discussion starts with gathering information, and builds from there.  Once we have a sense of the value of the home and the amount owed, and we have discussed any issues such as where the money for the down payment came from, we can start helping you reach the right decision.  You may also be struggling with decisions regarding who lives in the house and who moves out, and we can advise you on those issues as well. 

About ADAM (American Divorce Association for Men)

The American Divorce Association for Men (ADAM) is a group of highly qualified attorneys who advocate for men’s rights in divorce, child custody and parenting time, paternity, support, property settlement, post judgment modifications, and other family law matters. Since 1988, ADAM has been aggressive, diligent, and uncompromising when representing their clients. A team of compassionate and skilled family law attorneys, ADAM is dedicated to being Michigan’s leading divorce attorneys for men and practices a policy of integrity in all dealings.

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