Valuable marital property often dominates the negotiations for property division in divorce. Spouses have to make arrangements for the allocation of their property as well as responsibility for their marital debts.
Under equitable property distribution laws, both spouses have an interest in home equity, regardless of how they hold title or who may have earned more during the marriage. Divorcing spouses have to reach important agreements regarding the marital home or ask a judge to make decisions on these key issues.
The three concerns below are often the most crucial for a couple’s primary residence during the property division process.
1. What is the home worth?
Property values fluctuate based on the market and the overall condition of the home. Frequently, properties appreciate in value while occupied by owners. The house could be worth far more now than it was when the spouses purchased it or when they most recently refinanced the mortgage.
They can either work together to set a value that they deem appropriate or ask a real estate professional for insight. Professional appraisals and comparative market analysis reports from real estate agents can help divorcing spouses appropriately estimate the fair market value of the home where they have lived together.
2. Who retains possession?
Staying in the marital home might be a goal for some divorcing individuals. They may want to keep things stable for their children, or they may have emotional attachments to the property that predate the marriage.
Factors including financial stability and the ability to take care of the home can influence how the spouses address possession or what the court ultimately decides is appropriate. Child custody can factor into that decision as well.
3. How do spouses split the equity?
After determining what the property is worth and then deciding which spouse stays or if they will sell it, the next step is to address accumulated equity. One spouse may receive a payout from the other if that person is retaining the home, or the spouses might agree to divide the sale proceeds in a specific manner.
Working together to arrange a settlement may be preferable to litigating and leaving everything to the discretion of a judge — especially in scenarios where the spouses have specific goals for the home and other property division issues. Learning more about property division regulations and having experienced legal guidance can help people prepare for the complex process of separating their finances.