Dividing Real Estate in a Divorce
Dividing Real Estate in a Divorce: The popular wisdom, “It all gets split 50/50 [in a divorce]” is at best an approximation — after all, it doesn’t make much sense to literally saw the family home in half and give one half to each divorcing spouse. What a court can do, however, is split the value of the home 50/50 and equitably distribute this value to the divorcing spouses. There is more than one way to do this.
One Spouse “Buys Out” the Other Spouse
One way to split the value of the house is for one spouse to give up title to the property and buy out the other spouse by paying half its value to the other spouse. This money should go to paying off the mortgage if possible to prevent the non-owning spouse from remaining liable on the mortgage. The spouse wishing to buy out the other spouse might pay for it by simply sacrificing that amount in the equitable division of property that occurs incident to the divorce.
Sell the House and Split the Proceeds
Selling the house and splitting the proceeds might make sense if neither spouse is attached enough to the house to be willing to sacrifice anything significant to keep it. Keep in mind that proceeds are probably not going to be enough to allow each spouse to purchase a new home. And by all means, do not advertise it as a “divorce sale” unless you are willing to consider offers in the low three figures.
Own the House Jointly With Your Ex
In this case, one ex-spouse will probably want to live there, but the other ex-spouse’s credit will also reflect the mortgage, which might prevent that ex-spouse from qualifying for a new home loan. If you take this route, be sure that the legal title lists both ex-spouses names as joint owners.
Mortgage Problems
Taking your name off the title to the house is one thing, and taking your name off the mortgage is another. Indeed, taking your name off the title is much easier than taking it off the mortgage. Yet it is your mortgage obligation, not your ownership status, that has the greatest potential to harm your credit score. Attempt to refinance the loan into a new mortgage with only one spouse’s name, if you are in a financial position to do so.
A Major Mistake to Avoid
Do not buy a new home or renovate your current home while divorce proceedings are still pending, unless you want your ex-spouse to be able to claim a 50 percent interest in it. Remember, property acquired during the marriage is generally considered marital property, even while a divorce is pending.
Remember that in all of the foregoing scenarios, as well as other scenarios not listed above, the assistance of a marital and family lawyer to assist with such issues when they arise is of critical significance.
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