The marital home is typically the largest—and most contested—asset in any divorce. Before proceedings even begin, clients often wonder who will get the house, what will happen to it, and whether or not they and their children will have a roof over their heads. If the divorce is amicable, these questions may be answered quickly. However, if the dissolution is hateful and toxic, there can be exhaustive arguments leading to time-consuming back and forth between spouses and their lawyers. In these instances, the solution may not even be up to you or your ex, but a judge in a courtroom. The resolution is also determined by the state in which you reside.
If you and your spouse are unable to come to an agreement and must involve a judge, they will defer to state laws governing property ownership and asset division during a divorce. Each state follows either community or equitable distribution property laws.
Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin are community property states. Alaska is an opt-in community property state, enabling spouses to decide whether or not they want to make their property community property. These states encourage couples to split any assets and debts acquired during a marriage in half. That means all income, savings, investment and property purchased—despite the amount each party contributed—will be divided 50/50.
Equitable Distribution Property
The remaining are equitable distribution property states, where property is not split equally. Factors that determine who receives or concedes more include income, inheritance, earning potential, and length of marriage.
The date the property was acquired is also a determinant. If the property or asset was purchased prior to the marriage or given as a gift or inheritance, a judge cannot award it to the other party. The home can only be awarded to one party if it qualifies as a “marital” or “community” property, meaning it is owned by both spouses.
When determining ownership of the marital home, the judge will consider a number of factors including each spouse’s financial circumstances, contributions to the home, and employability. They’ll also look at each spouse’s age, physical and mental health, marital misconduct if applicable, source of funds for the home, and value of the marital home. The parent with custody of minor children has higher odds of receiving the home than the other. In some cases, the judge may grant the home to a single spouse, while in other cases, they’ll allocate shares to both parties. They can do so two ways:
The judge can require one spouse to buy out the other, or in other words, pay the other’s share. A court can also allot exclusive possession to one spouse for a period of time, and require the couple to sell the home by a certain date. Other decrees include requiring the couple sells the home immediately, or offsetting the value of the home by awarding assets to the other spouse.
When a court employs this method, the equity in the marital home is distributed at a later date. A judge can declare the spouse with custody can live in the home until the youngest child turns 18. Once he or she reaches that birthday, the house must be sold. This approach can also be used in cases during which the housing market is soft. The home sale can be held until the market picks back up. In either of these situations, the court will require one party to cover fees, taxes, mortgage payments, and insurance costs.
Whether you negotiate an agreement with your soon-to-be ex-partner or have a court settle the matter, you’ll generally have three options for the family home: sell it, negotiate a buyout, or co-own it. Although the sale of your home can be emotionally and financially taxing initially, the money from the sale may be helpful to your life after divorce. The second option, the buyout, enables one spouse to purchase the home from the other, either in cash or with the promise of other assets in exchange for the home. The third alternative, which is typically only employed for a set period of time until the home is sold, is co-ownership. The spouses continue to co-own the home, whether both remain inside or not, and split the expenses.
To prepare yourself for the asset-splitting process, check out our resource Build Your Divorce Dream Team: Key Organizations to Know. If you’re looking to find an expert, whether it be a lawyer or real estate agent who specializes in divorce, visit ProConnect, our network of divorce experts in your area.