Is Your Home Your Castle?

In a divorce case, the marital home is often a significant asset, as well as a strongly emotional issue.

In determining what to do with the marital home, there are three basic choices. It can be: sold; one party can purchase the other’s interest; or one party can have “exclusive use” for a period of time.

There are pros and cons to each scenario.

Selling the Home – If the home is sold, then both parties can have a clean slate. If a couple were having trouble affording it together, then selling it is the best option. If the home is sold neither party feels that the other has some type of custody advantage, that is, the children wanting to stay in their “home.”

Buyout – Another option is that one party purchases the other party’s interest. The value of the home and the equity in it should be the driving force as to whether this is a good idea. For example, if the house is valued at $500,000.00 and $400,000.00 is owed on it, and you purchase your spouse’s presumptive 50% interest, can you carry a $450,000.00 mortgage by yourself? Were you struggling together with the $400,000.00 mortgage?

On the other hand, if the house is worth $200,000.00, and you owe $40,000.00 on it, you could purchase your spouse’s interest for $80,000.00, and have a mortgage of $120,000.00, which may be a financial option for you. With the buyout, the children can stay in the home they are used to, but there is no further interaction between the parents about decisions concerning the home. Also, you may choose to buy out your spouse’s interest if the home will not sell quickly so you don’t have to continue to live together.

Exclusive use – Whether by agreement or by decision of the court, one parent may have exclusive use for a period of time. The factors involved in an exclusive use include, the needs of the children, whether the non-custodial parent is in need of the proceeds from the sale of that home, whether comparable housing is available to the custodial parent in the same area at a lower cost, and whether the parties are financially capable of maintaining the residence. Courts will look at the age of the children, do you want to move a high school senior out of the district?

It is crucially important when making a decision about the disposition of the marital residence to separate the emotional from the financial. Sometimes there is a “lose for winning.” In 25+ years I have never had a client who sold his or her portion of the home, whether to their spouse or to a third party buyer, later call me to tell me how happy they are to have kept the house, but I have had many calls a year or two after “winning” the house asking if I do closings

Leave a Reply

Your email address will not be published. Required fields are marked *