One of the major issues often arising during divorce is determining what to do with the marital home. In many cases, parties to a divorce are faced with the dilemma of deciding how to address the home where they resided during the marriage. In most cases, there are two options:
1. Sell the house – In many instances, the parties want a fresh start upon their divorce and will simply decide to sell the marital home and divide the sale proceeds as they agree or as the court decides. This solution is typically the simplest way to address the martial home as the parties will not be required to value or appraise the property (for purposes of the divorce), as the value (and proceeds resulting therefrom) will be determined by the sale price. The decision to sell the marital home can become complicated if the house is “under water” (i.e. the debt or mortgage on the property exceeds the value of the property). In situations such as this, the parties may want to consider a short sale of the property to free them from the debt associated with the property, but a short sale can become a complicated and long process.
2. Buyout by one party – The other common solution for addressing the marital home in cases of divorce is for one party to remain in the home and buyout the other party’s interest in the residence. In these cases, the parties will need to agree on the value of the residence for purposes of determining the equity and the exact dollar amount for the buyout of one’s interest in the property. Either the parties can agree on a value for the home themselves or utilize appraisals to decide on what the value should be. The party remaining in the residence will obviously prefer a lower value for the home while the person leaving the home will prefer a higher value in order to secure a larger buyout of their interest in the property.
In addition to establishing a value for the home, the person leaving the residence will also want to ensure that a plan is in place to remove their name from title and any existing mortgages encumbering the property. Title to the property is typically transferred out of the name of the party leaving via a Quit Claim Deed. Obviously, the party deeding their interest in the home to their former spouse will not want their name associated with the property in any way thereafter, to prevent him/her from incurring any liability with regard to a property that they no longer own or live in. Refinancing the existing mortgage and securing a new loan in the name of the person remaining in the home will typically remove a party’s name from an existing mortgage. Problems with refinancing may arise if the person remaining in the home (and buying out their spouse) lacks the adequate income, assets or credit score with which to qualify for a refinance. Distribution of the marital home is a common issue that arises in many divorce cases.
The issue can be simple or can become very complicated, depending on the facts. The Law Offices of Jonathan Merel, P.C. is focused exclusively on the practice of family law and has years of experience in advising their clients regarding important issues that impact the outcome of a divorce, including issues concerning the marital home.