Often one of the largest assets that a married couple owns is their home. When a couple divorces, as with any other marital asset, the house must be divided (usually equally) between the parties. How to accomplish that goal can be a sensitive and complicated issue.
There are several options when dealing with the division of this large (and, unfortunately, not readily convertible to cash) asset. Simply… one of the parties can keep the house or the house can be sold. Here are a few things to remember about your options:
KEEP THE HOUSE:
One party “buys out” the other party’s interest in the house (after any debt is taken into account) OR one party takes a larger portion of other marital assets in lieu of receiving any equity in the house.
Usually retaining the house and paying the other party for their share of the equity involves refinancing existing debt. This accomplishes two mutually beneficial goals: #1 the joint debt is paid off (and the spouse not retaining the house is no longer obligated on the debt) and #2 the refinance provides a source of funds for one party to pay to the other. This involves some time and a lender, and therefore time requirements must be built into any separation agreement, including the possibility that it is not possible to obtain financing.
In the event that one spouse simply does not follow through with the agreement, there should be built in steps for what happens next, which is usually listing the house for sale. The goal for the spouse not retaining the house is to receive their share of its value and to no longer be obligated on any mortgage or any other expenses associated with the property.
SELL THE HOUSE:
The house is sold and, after the transactional costs and debt are paid, the balance of the proceeds are divided between the parties.
In this scenario the parties should agree to the list price, realtor, payment of expenses, etc., so that selling the house can be as smooth of a transaction as possible. A receiver could be appointed by agreement of the parties if the house does not sell by a designated date or if the parties are not able to agree on the sale terms. All of the details should be discussed in advance and included in a Separation Agreement or Agreed Judgment Entry so that there is no misunderstanding and the sale happens in a timely fashion.
The attorneys at Thomas Law Group can guide you through a divorce and the division of assets and property. Contact us to speak with one of our attorneys.