Equity in the Marital Home
In many divorces, the equity in the marital home is the
largest marital asset to divide. Because each case has unique circumstances,
there is no one answer concerning how the home will be divided.
The courts prefer for parties to come to an agreement on how
the home will be divided between the parties, but if the parties cannot agree, the
court will decide. If the parties do come to an agreement, a Settlement Agreement
may be crafted to suit the particular needs of your case.
Selling the Home
One option is for the parties to sell the home and divide the
equity. The parties may choose this option if neither party wishes to retain
the home or one party could not afford to refinance the home individually.
If the parties agree to sell the home, they must agree on a
list price, an agent, final sale price, who will live in the house until it
sells, and who will pay the bills (mortgage, insurance, utilities, etc.).
Once the home is sold, the mortgage is paid off, and any costs associated with the sale are paid (real estate agent commission, transfer tax, attorney's fees, etc.), the parties may divide the equity, or the equity may be granted to one party as a form of property settlement or spousal support.
One Party to Retain the Home for a Set Time Period
One party may retain exclusive use and possession of the
marital home for a set period of time. This option is not unusual when the
parties have minor children and wish for the children to grow up in the home
and/or remain in the school district.
The parties may agree for expenses to be shared; the party
living in the house will pay the mortgage, property taxes, utilities, and repairs;
or the spouse who is not in possession of the home may assume responsibility
for these costs as a form of child support or alimony. Once the agreed-upon
time passes, the marital home will either be sold and the proceeds divided, or
one party will buy out the other party's interest and retain the home.
One Spouse to Keep the Home
Another option is for one party to retain exclusive use and possession of the marital home and buy out the other party's interest in the equity. However, so long as both spouses are listed as borrowers on the mortgage documents, they are both legally responsible for the mortgage payments. Thus, it is important that a Settlement Agreement require the party retaining the home to refinance the home in their name alone.
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Written by: Rebekah Ann James