Real Estate Interests Under Property Division Law
Real estate division is a central issue in many divorce cases, often involving both financial complexity and personal sentiment. In most situations, the division of real estate depends on legal guidelines in the state where the divorce is taking place, as well as the couple’s own circumstances. Factors such as how and when the property was acquired, whether it increased in value during the marriage, and each spouse’s contributions can influence the final outcome.
Identifying Marital and Separate Property
Determining which property is marital and which is separate is an important step. Marital property usually includes most real estate acquired during the marriage, while separate property commonly refers to real estate owned by one spouse prior to the marriage or received as a gift or inheritance specifically for that spouse. When a home was purchased before the marriage, it might be categorized as separate property. If both spouses contributed to its mortgage, improvements, or renovations after the marriage began, any resulting increase in the home’s value may be treated as marital property.
Dividing Equity
Courts in community property states frequently divide the equity in a marital home equally. In equitable distribution states, however, judges may allocate a different share to each spouse, depending on factors such as how much each spouse contributed to mortgage payments and improvements, or whether separate funds were used to pay for some or all of the home’s purchase. A court may order the home sold, with proceeds divided after deducting costs such as agent commissions, or it may allow one spouse to keep the home and buy out the other’s share. When making such decisions, judges may also take child custody arrangements and the overall balance of marital assets into account.
Selling the Marital Home
Selling the marital home can provide liquidity and a clear path to dividing proceeds in divorce. The net proceeds are split by subtracting any outstanding mortgage, closing costs, and real estate commissions from the final sale price. In assessing whether to sell, spouses often consider the likelihood that repairs will be needed before listing, the home’s current market value, the emotional significance of the property, and whether each spouse has a stable alternative housing arrangement.
Buying Out a Spouse’s Share
A buyout typically involves one spouse taking full ownership of the marital home by purchasing the other spouse’s share of its equity. In most cases, a spouse seeking to keep the home will refinance the mortgage in that person’s sole name and remove the other spouse from the property title. When buyouts occur in equitable distribution states, some courts may choose not to factor in the potential costs of any future sale, placing the risk of market changes on the spouse retaining ownership. While a buyout can allow one spouse to remain in a familiar home, the spouse who sells will no longer have any claim to possible appreciation in the property’s value.
Co-Ownership After Divorce
Some former spouses choose to continue co-owning the marital home. This path is sometimes selected when the property is expected to grow significantly in value over time, or when both spouses believe it is best for children to remain in the home. Ongoing expenses such as mortgage payments, property taxes, insurance, and maintenance typically remain a shared responsibility during the co-ownership period. Courts and attorneys often advise spouses who take this route to sign a written agreement that sets out how they will handle major future expenses, what happens if one spouse cannot meet financial obligations, and how the co-ownership will end at a specified date or upon the occurrence of certain events.
