WHAT ARE YOUR OPTIONS FOR THE MARITAL HOME DURING A DIVORCE

• When selling a home during a divorce there are a few different options that a divorcing couple can decide on.  It’s important to think about all the options that are available and to select the best option. 

  1. One of the spouses “buys out” the other out

  One of the spouses takes over the full responsibility of the home.  In order to do this, the spouse who is buying the other out will have to pay a lump sum to the other, which typically will incorporate any equity that has been built in the property over the years of marriage. In order for a buy-out to be possible, the spouse who is taking over full responsibility for the home will need to apply for a refinance of the home in only their name.  The party who is going to take responsibility for the home will need to go through the mortgage pre-approval process and prove that they have the ability to afford the home. It’s recommended that when one spouse decides to buy out the other that an attorney and/or the courts are involved.  This helps ensure that one party is not getting taken advantage of and certainly can help eliminate problems in the future.

  2. Sell the home

  This may be the optimal solution for any number of reasons, the most basic of which is that neither spouse wants to keep the home or that neither spouse can afford to keep the home. If the divorcing couple decides to sell the home, the proceeds or shortages that result in the sale of the home are generally split 50/50.

  3. The couple can continue to “co-own” the home

  This option is often chosen by couples who have children whom they do not want to uproot from their homes.  The success of post-divorce co-ownership depends on several factors, including:

  • There is a mutual understanding that the full amount of the mortgage on the house will appear on both spouses’ credit reports.  If the spouse covering the mortgage falls behind in making payments or allows the home to go into foreclosure, both credit reports will be affected equally.

  • Both spouses understand that they are essentially entering into a business relationship rather than extended the former family relationship. All agreements between the two parties, such as the agreement of one spouse to make payments to the other toward the eventual sole ownership of the home, should be commemorated in writing.

  • Each spouse is prepared to accept that his or her financial future will continue to be affected by the decisions of the other, particularly those directly involving the property, for as long as they co-own the home.