DISCLAIMER: This blog post is meant to be used for informational purposes only, not legal advice. If you need assistance navigating the legalities of keeping or selling your home in a divorce, HomeLight always encourages you to reach out to your own advisor.
Divorce ranks as life’s second most stressful event, and decisions over what to do with the family home drive some of the most heated disputes between couples parting ways.
Beyond the emotional ties to a particular home, sharing real estate comes with an intricate maze of legal strings that have to be sorted out before the dust can settle. It’s a bit more complicated than, say, splitting up the wedding china.
However, with over 630,000 divorces recorded annually, you’re not the first to face the tricky divorce real estate questions keeping you up at night.
Let’s go through them one by one, and tackle your top concerns with help from professionals in the field who have a combined 50 years of experience.
1. How is a home calculated in a divorce?
But what this question is actually asking is, “Am I in a community property or equitable distribution state?” Your answer could impact how the equity split from your home is calculated.
Community property (the minority of states)
If you live in a community property state and your home, classified as community property, was acquired during the marriage, the proceeds from the sale are typically split strictly and equally 50-50. If one spouse bought the home before the marriage, however, that is considered separate property and the rules for splitting become a bit more complicated.
Because divorce is governed by state law as opposed to federal law, there are exceptions to these rules. MaritalLaws.com, an online resource for divorce, custody, child support, visitation, property division, and alimony laws, provides the divorce laws of each state with an easy, interactive map and all the fine print in one place.
Community property states include:
- New Mexico
*Note: Divorcing couples that live in Alaska can opt-in to a community property system or default to an equitable distribution system.
Equitable distribution (the majority of states)
If you live in one of the remaining states, the property acquired during the marriage will be divided fairly and equitably based on factors deemed by the courts.
According to LegalZoom, the leading online provider of legal solutions and documents, such factors include:
- How much each spouse earns currently
- The earning potential of each spouse
- The value of a spouse staying home or raising the kids
While there are slight differences, at the end of the day the laws of community property and equitable distribution states do remain fairly similar. According to Marco Brown from Brown Family Law: Utah Divorce Attorneys who’s helped nearly 4,000 divorcing couples, regardless of which type of state you are in, “The home being purchased during the marriage and doing a 50/50 split happens in 95% of cases.”
2. Should I keep or sell the home in a divorce?
Ideally, to keep or sell a marital home in a divorce comes down to what you and your spouse can decide together. However, if emotions are high and it’s difficult to have a conversation or come to an agreement, then it may be up to a judge to determine a particular outcome.
Dana Browning, a top-selling real estate agent in Nampa, Idaho, with a perfect track record of 100% of listings sold and experience working with divorcing couples, reports, “Often, it’s about sitting with both partners and knowing the goals, because they can be different. Currently, I have one client who wants to stay in the property, but she can’t qualify to buy him out, but wants to keep the kids in the same school district so we have to get creative around how to make it happen.”
You may want to sell the home if:
- You can’t afford the payments and home upkeep on your own
- You can’t easily refinance to pull enough cash out to pay the other party
- It’s too emotionally painful to live there after the divorce
You may want to keep the home if:
- You have children and want to minimize the impact of the divorce on them
- You want to keep kids in the same school or school district
- You have strong emotional ties and memories associated with the home
Fran Williams, a top real estate agent in Lakeland, Florida, with 18 years of experience working with divorcing clients, advises that divorcing couples may want to consult with an attorney and make the decision whether to sell the home before reaching out to a real estate agent.
“If you’ve got a belligerent situation, and one party says they’re not going to sell no matter what — that they’re going to sabotage this process — then I don’t even list the home,” says Williams. “If it’s court-ordered, that’s a different situation. They have to cooperate.”
3. Should I buy out my spouse’s share of the home?
Keeping the home and buying out your spouse’s share of the home to assume full ownership could make sense for several reasons:
- You have children and want to maintain the stability of the family home
- The home is in an ideal location and near your work, family, and friends
- The market conditions aren’t ideal right now to sell
- You bought the home recently and haven’t had much time to build up equity
- You have enough other assets to offset the other person’s equity in the home
In the event that you want to keep the home, you need to consider whether you can actually afford to do so.
In most cases, the spouses have qualified for their mortgage amount together. So you first need to determine whether you can afford to qualify for a mortgage independently. But keep in mind that because a buyout typically involves pulling out a big chunk of equity, the payment will be significantly higher.
Brown warns that there are a lot of potential pitfalls to this situation. “Sometimes, they will agree to hold the home in common to get the kids through school and will do it for way too long” which may create resentment years down the road.” He continues, “When agreeing to defer refinancing, they may not put in a temporal trigger, for example, 90 days after the decree being signed. So one spouse can wait 10 years to refinance and there’s nothing you can do about it.”
If one party is planning to keep the home, make sure you get solid legal advice to determine the best course of action for your individual circumstances.
4. Will my divorce settle or go to trial?
Lawyers.com, a legal consumer website from Martindale-Hubbell, reports that “more than 90% of divorce cases settle prior to trial — either by one spouse offering a settlement that the other accepts or at mediation.”
If you and your spouse can agree on how to divide assets, you might be able to negotiate a settlement agreement between the two of you without the assistance of an attorney. This is known as an uncontested divorce and could save you time and money.
However, while James L. Powers, a Chicago-based attorney with more than 30 years of experience, says that couples can choose this route, it’s not necessarily in their best interest.
“As it relates to drafting a marital property settlement agreement, I think an attorney is necessary because we’re dealing with issues or finances that people don’t know about — even down to making sure that there’s a full disclosure of all data,” says Powers.
Since an attorney can only legally represent one spouse in a divorce case, to avoid a conflict of interest, the benefit of both parties cooperating and coming to an agreement is huge.
“When you’ve heard people say ‘We only got one attorney,’ it’s usually people who’ve reached an agreement on their own, and one of the parties hired the attorney who then represents that party and drafts the documentation. But, technically, the other party is pro se which means they represent themselves,” Powers explains.
People don’t realize that in order to remove someone from the home, it’s not just a title thing, but it requires refinancing through a lender. If payments aren’t made and the home goes into foreclosure, then it affects both partners.
- Dana Browning Real Estate AgentCloseDana Browning Real Estate Agent at Keller Williams Realty Boise Currently accepting new clients
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5. What happens to the mortgage after I divorce?
In the wake of a divorce, one of two things typically happens to the mortgage on joint property: you sell the home and each spouse collects their share of the net proceeds, or one spouse takes full ownership of the home by refinancing the mortgage under their name.
Browning warns, “People don’t realize that in order to remove someone from the home, it’s not just a title thing, but it requires refinancing through a lender. If payments aren’t made and the home goes into foreclosure, then it affects both partners.”
Of course, the spouse assuming ownership will need the necessary income and credit score to qualify for the new loan.
The process gets more complicated if a divorcing couple is underwater on their home, meaning they owe more on the home than it’s currently worth, or if they’re facing financial hardship.
“Maybe the husband quit paying the mortgage and they’re behind, so short sales are a possibility,” says Williams.
“In one case, we dealt with the bank directly, which the person was very grateful for,” Williams adds. “We were the go-between. Because they were so far behind in the mortgage and because divorce often results in financial disaster, at least they had that option.”
6. What if my spouse refuses to sell the home?
It may be the case that you need to sell the home in a divorce, but your spouse won’t cooperate. If your spouse can’t afford to buy you out, then you’ll need to work with your divorce attorney to file a motion with a family law judge and compel the sale.
When you’re at odds with your spouse during a home sale, it’s crucial to get an experienced real estate agent involved to manage the transaction and handle all communications.
While you might be tempted to hire a friend as your agent, Powers advises against that during a divorce. Your ex-spouse may be resistant to working with a professional who they feel is on “your side,” rather than a neutral third party who can act as a fair go-between.
Williams recalls, “When we helped a gal, I asked her what was most helpful to her, and she said, ‘You took the burden completely away from me. You communicated with my husband, you communicated with me, I did not have to talk to him.’ That’s what she needed at the time.”
7. How do I protect my home sale from the messiness of divorce?
One of the biggest mistakes that divorcing couples make is allowing personal disagreements to get in the way of their mutual best interest of a successful and profitable home sale.
“You’ve worked hard your whole life to get assets,” says Powers. “Winning an argument or feeling that you got the better of someone on this particular issue, when ultimately it just hurts you dollar-wise, doesn’t make any sense.”
Despite experiencing strong emotions, you need to treat selling your home like the business deal that it is, and follow your real estate agent’s advice when it comes to home preparations, including cleaning, decluttering, and stagings. The alternative is accepting an offer lower than what your home is worth.
“I know finances are often strained at that point, but at a minimum get the home clean. If you’re trying to sell a disaster zone, you’re not going to get a good dollar,” Williams says.
8. Should someone live in the home while I’m trying to sell it?
Whether one spouse stays or both spouses leave is a personal decision. However, if both of you leave, research shows that it can be more difficult to sell an empty home. Browning adds, “The home doesn’t show as well if it’s empty. The rooms look smaller.”
In addition, it’s rarely sustainable for divorcing couples to make three housing payments every month, so having one person remain in the home keeps your monthly housing expenses in check.
The person who stays in the home should keep it in clean, marketable condition and be prepared to leave for showing appointments and the home inspection.
However, if one person is staying, it’s important to stage the home properly. Browning argues, “We don’t want them to know the sellers are getting a divorce because that hurts negotiating. For example, we may keep both sets of clothes in the closet.”
9. How can I keep my divorce private while my home is on the market?
Keeping your home sale private is difficult to do when selling the home. Browning empathizes, “The second a for sale sign goes up, people are going to be chatting about it.”
The most effective way to keep the home sale private is to never list it on the market, and instead seek a cash offer. While you will likely receive an amount slightly below market value, you can avoid having your divorce become a spectacle for your neighbors, and the process is typically much faster.
A platform like HomeLight’s Simple Sale can help you receive a cash offer fast and keep your situation private.
Williams stresses that one of the best ways to keep your divorce private from potential buyers is to make sure the home looks tidy from the outside in and remains in generally sellable condition. A property in disrepair will send red flags to buyers that there’s trouble at home, which they may try to use as leverage in negotiations.
10. Do I have to disclose the divorce to homebuyers?
You have no legal obligation to disclose your divorce to buyers, and you should work with an agent you trust to be discreet and safeguard your confidential information.
Browning advises you to instruct your agent to not disclose the reason for the home sale.
“That’s a question we get a lot at open houses ‘Why are they selling’ and I tell them that I don’t have permission to disclose that personal information.”
Again, keep any evidence of turmoil private and do whatever you can so that you don’t inadvertently air your dirty laundry.
“I think the biggest issue is people making the sale of the home adversarial when it really is something that is separate and distinct,” Powers explains.
11. If my spouse owned the home before we married, am I entitled to any share of the proceeds?
According to LegalZoom, property acquired before the marriage is typically considered separate property and may belong wholly to the spouse who brought it into the marriage.
However, there are many ways that separate property can become marital property, such as:
- The name of the other spouse was added to the deed
- The other spouse has been involved with the property
- The property has appreciated in value due to the other spouse’s marital efforts
To complicate things even further, how ownership is determined is dependent on the state you live in and not necessarily a one-size-fits-all.
“It’s going to depend on your state law,” says Williams. “In Florida, we’re a homestead state. So whether you’re on the deed or not, it doesn’t matter. If you’re married, you live in the home and it’s your homestead, then each party has a right to half.”
This situation almost always requires the expertise of a skilled attorney. Brown states, “If you have premarital money, a gift from family, or owned the home before the marriage, then the math becomes more complicated, and almost no one has any idea how to calculate the ownership.”
12. What if we own multiple properties together?
Generally speaking, owning multiple properties isn’t all that different from owning a single property. You divide ownership the same way you would if you had one property, but you just do it multiple times, once for each property.
However, you may have more options in this scenario; it may be possible to keep the homes if you can find a way to package them in a way that they offset the value. Brown states, “If someone has a portfolio, we divide the homes into two LLCs and go forward that way.”
You still may decide to sell some or all of your properties. In this case, disbursing the funds for each sale may get a little messy, depending on the timing of the sales and potential tax implications.
According to Browning, it may be best to leverage a trust account: “If they are going to sell them, you sell one, put the money in a trust account until they’ve all sold, and then settle the amount at the end.”
13. Should we include children in the conversation about the home?
This is a highly personal decision dependent on a variety of factors including the age of your children, whether they are enrolled in a nearby school, and the kind of relationship a divorcing couple has with them.
Williams encourages divorcing couples to consider their children’s emotions regarding the home as they tend to be torn throughout the home sale and worried about how the divorce will change or uproot their lives.
One strategy parents can use to address their kids’ sentimental attachment to the home is to include them in the process of choosing their next home, as opposed to separating or isolating them.
If there are disagreements between spouses, Powers emphasizes how important it is for parents to remember what’s in the best interest of their children first and to examine the unintended consequences of their behavior.
“People come in and they sit across from me in the initial meeting and they say, ‘I want, I want, I want’ as it relates to the kids,” says Powers. “And I look at them and say, ‘Okay, but you haven’t told me what’s best for your kid. Why don’t you start telling me that to start out, and then let’s get to what you want?’”
14. What is a deferred sale, and should we consider it on behalf of our children?
A deferred sale is an arrangement, either agreed upon between the spouses or ordered by a court, to not sell the family home for a time.
Deferring the sale of the home may make sense if you’re waiting for the real estate market to improve or if your child is still a minor and you don’t want to uproot them from their school.
But keep in mind that “if you do agree to defer the sale, you’d also have to reach an agreement regarding who’s going to pay the mortgage, taxes, insurance, maintenance, and repairs until the house sells,” according to HomeGuides by SFGate, the established home section of the sister-site of the San Francisco Chronicle.
15. Which professionals do I need to hire to get through this process?
Though it will vary depending on your situation, there are several types of professionals you may consider hiring to help you get through your divorce.
An experienced real estate agent or broker to sell your home
- Handles home preparations, marketing, negotiations, and closing paperwork related to the home sale
- Protects the success of the home sale from disagreements in a divorce
- Serves as a neutral third party between divorcing spouses
- Keeps sensitive information confidential
A professional divorce attorney to represent your legal interests
- Prepares final documents and appears in court
- Legally represents one party in a divorce case and works in their best interest at all costs
- Educates clients on the division of marital property and the scenarios that could complicate a divorce case based on state law
- Examines all financial records and calculates how to divide everything
- Fixes bad agreements from mediators or other attorneys
- Discourages clients from behaving out of spite (i.e. suing a spouse) when it’s not in their best financial interest
A mediator to counsel you through tough decisions
- Helps you and your divorcing spouse reach an amicable agreement more cost-effectively
- Works with you through the issues of property distribution, child care, retirement, taxes, and more
- Prepares documents so that you file the divorce correctly and legally
Real estate and divorce: Level heads lead to better outcomes
Divorce is never a situation anyone expects to be in. Regardless of the reason, it can be a scary and emotional time of upheaval and change — with many unknowns.
“There’s an old saying that in criminal law you represent the worst people who are at their best, and in divorce, you represent the best people who are at their worst,” Powers explains.
Making decisions over the marital home adds complexity to an already stressful process.
You can help simplify the process by using Homelight’s free Agent Match platform to choose a top agent in your area that has experience working with divorcing couples. You can even find a Certified Divorce Real Estate Expert (CDRE) who has specific experience and training to help your process go smoothly.
Amanda Hanna contributed to this story.
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