Beyond the emotional ties to a home, shared 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 827,000 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. Are you in a community property or equitable distribution state?
According to Divorce Net by Nolo, one of the leading websites for legal matters, “the courts will divide your assets under one of two basic schemes: community property or equitable distribution.”
Community property (minority of states):
If you live in a community property state—Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, Wisconsin, and Alaska*—and your house, classified as community property, was acquired during the marriage, the proceeds from the sale are split strictly and equally 50-50.
If one spouse bought the house before the marriage, however, that is considered separate property and will not be split.
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.
*Note: Divorcing couples that live in Alaska can opt-in to a community property system or default to an equitable distribution system.
Equitable distribution (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
James L. Powers, a Chicago-based attorney with 32 years of experience who represents between 30 to 40 divorcing clients every year, says that while there are slight differences, at the end of the day the laws of community property and equitable distribution states do remain fairly similar.
2. Should you keep or sell the house?
Ideally, this 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, there are laws on the books that can force a particular outcome, depending on your state.
You may want to keep the house if:
- You have children and don’t want to uproot them.
- You have strong emotional ties and memories associated with the home.
You may want to sell the house if:
- You can’t afford the payments and home upkeep.
- It’s too emotionally painful to live there after the divorce.
The decision to keep the house or sell it is part emotional and part financial. Sometimes our wants aren’t financially feasible—especially when it comes to the outcome of the house—which is why cooperation goes a long way in this situation.
Fran Williams, a top real estate agent in Lakeland, Florida, with 18 years of experience working with divorcing clients, says a divorcing couple should reach out to a real estate agent after they’ve consulted an attorney and made the decision to sell the house.
If you’re still in the argument stages, you may find it difficult to get an agent to work with you.
“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 house,” says Williams. “If it’s court-ordered, that’s a different situation. They have to cooperate.”
3. Should you buy out your spouse’s share of the home?
Buying out your spouse’s share of the house to assume full ownership makes sense for several reasons:
- You have children and want to maintain the stability of the family home.
- The house 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 house recently and haven’t had much time to build up equity.
Real estate attorneys say it’s usually the case that one or both spouses want to keep the house, but the real question is if either one of them can afford to do so on their own.
Typically the spouses have qualified for their mortgage amount together, and only one or neither may qualify to take over the mortgage independently. In that scenario, the person who gets to keep the home is the one who can come up with the money to buy the other out.
That can be a challenge when all of your assets, including your savings, are getting split during the divorce.
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 can 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 Powers 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, due to 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.
If you and your spouse can’t agree on who gets to keep the house, an experienced attorney will guide you through the process and the fine print of your state’s law.
5. What happens to the mortgage after you divorce?
In the wake of a divorce, one of two things typically happens to the mortgage on joint property: you sell the house to pay it off and each spouse collects their share of the net proceeds, or one spouse takes full ownership of the house by refinancing the mortgage under their name.
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 house 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 ads. “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 your spouse refuses to sell?
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 critical to get an experienced real estate agent involved to manage the transaction and handle all communications.
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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.
“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 you protect your home sale from the 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.
“As I tell people, 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.”
That means even when emotions reach fever pitch, 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 house clean. If you’re trying to sell a disaster-zone, you’re not going to get a good dollar,” Williams says.
8. Should someone be in the house while you’re 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 house.
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 house should keep it in clean, marketable condition and be prepared to leave for showing appointments and the home inspection.
9. How can I keep my divorce private while my home is on the market?
Williams stresses that one of the best ways to keep your divorce private 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.
Keep the home in shipshape, on the other hand, and buyers will be none the wiser.
Just a regular home sale… nothing to see here, folks!
Make sure your curb appeal gets a refresh (99% of Realtors recommend it)—so mow the lawn, trim the hedges, touch-up any chipped or peeling paint, and brush away debris and grime from the front entrance.
On the inside, the home needs to stay clean, depersonalized, and decluttered throughout the entire home sale process.
10. Do you have to disclose the divorce to buyers of your home?
You have no legal obligation to disclose your divorce to buyers, and you should work with an agent whom you trust to be discreet and safeguard your confidential information.
Again, keep any evidence of turmoil private and do whatever you can not to unintentionally 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 your spouse owned the house before you married, are you entitled to any share of the proceeds?
Generally speaking, property acquired before the marriage “belongs wholly to the spouse who brought it into the marriage and the other spouse has no right to it—unless certain other factors exist” 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.
Keep in mind that this question is also 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.”
If you aren’t sure where your state stands, consult an experienced attorney who will guide you through the options available in your state.
12. What if you have multiple houses together?
Statistica, a leading provider of market and consumer data, reports that there are 3.47 million households with people who own a second home in the U.S. in 2018.
If, in addition to the family home, a couple together purchased an income property with marital funds that isn’t being used as their primary residence, the court only has the authority to order the couple to sell the home and split the proceeds.
Additionally, in the event that only one spouse is on the title, then the non-title-holding spouse can seek monetary compensation through the courts but can’t request that the court transfer title to their name.
13. Should you involve your children in the conversation about the house?
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.
Considering that divorce is an emotional and stressful period in life, even in amicable separations, the question of whether to involve your children in the conversation about the house should be treated with care and sensitivity.
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 you consider it on behalf of your children?
A deferred sale is an arrangement, either agreed upon between the spouses or ordered by a court, to not sell the family home, at least for the time being.
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.
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 you need to hire to get through this process?
Though it will vary depending on your situation, here are the professionals you may need to hire in a divorce and a breakdown of their responsibilities.
1. 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
2. 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 or implicate 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) if it’s not in their best financial interest
3. A mediator to counsel you through tough decisions
- In lieu of a real estate attorney, a mediator 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
- Considered a kind of marriage counselor and life coach
Real estate and divorce: Where business meets emotion
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 family home adds complexity to an already stressful process, but the key takeaway is that whatever path you choose, let it be for your long-term financial interests, rather than a heat-of-moment win.