Real estate, particularly a marital home, often represents a significant portion of a couple’s assets and can pose a complex issue in divorce proceedings. Deciding what happens to real estate in a divorce requires careful consideration of the financial, emotional and practical implications of any particular course of action.
A couple’s ability to make informed decisions regarding real estate will depend on analysis of various factors, including the property’s value, the presence of children, the financial stability of each spouse and the overall division of marital assets. These are some commonly considered options.
Selling the property and splitting the proceeds
When neither spouse wants to or can afford to keep the property, selling it and dividing the profits (or otherwise managing the profits as part of the broader marital estate) can be a clean solution. This process involves appraising the property, selling it, paying off the mortgage or other associated debts and dividing the remaining proceeds according to the terms of one’s divorce settlement. This opportunity provides both parties a clean break and extra funds to secure new living arrangements.
One spouse buys out the other’s interest in the property
If one spouse wants to keep the property, they can buy out the other spouse’s share. This typically involves refinancing the mortgage to release the other party from liability. The purchasing spouse will also need to compensate the other spouse for their share of the equity in the property. This is usually done by giving up other assets or accepting additional marital debts as part of the couple’s broader settlement.
Co-owning the property
In some cases, ex-spouses may decide to continue co-owning the property, at least for a certain period. This option is often considered when a couple has minor children and wants to maintain stability for them and/or the real estate market is not currently favorable for sellers. This approach requires high cooperation and trust between the ex-spouses as they’ll continue to share the mortgage payments, property taxes, maintenance costs and other responsibilities.
If you’re divorcing, your budget is one of the most important things to remember while you’re trying to determine what will happen with real estate and your other marital other assets. Now is the time to take steps to protect your financial stability, so try not to let the emotional ties to any particular property make decisions for you.