Selling my House after Divorce: What to Expect
If you and your spouse own a home (this applies to multiple homes as well), as part of the divorce you will need to “divide the property.” What does that mean exactly?
Well, technically the property could be divided or partitioned but that is an unreasonable and draconian exercise which will leave you both with something that feels like less than half. Thankfully, Courts almost never do that.
What does the Court do with the marital property?
- Sell the house and divide the proceeds. Orders the property sold: the Court will give you a definite period to list the property (30 days, 45 days, etc.) and require the parties to share the mortgage payments and costs of sale. This way the parties do not need to argue about the value of the house because the market will determine that for them. See below for what to expect on your returns as explained by mortgage specialist Ida Reis, CMPS. firstname.lastname@example.org , or
- Equity buyout. The Court could order one of the spouses to buy out the other’s marital equity. To accomplish this, the would-be buyer spouse would need to get an appraisal of the house and provide the appraisal to the other side in advance of the discovery deadline. Likewise, the buyer would need to identify the appraiser as an expert in accordance with the Court’s Scheduling Order. Next the would-be buyer would need to get pre-approved to buy the house by a mortgage specialist like Ida Reis, CPS at Primary Residential Mortgage, Inc. As with the appraisal, the pre-qualification must be provided along with the identification of Ms. Reis as an expert to the other side in a timely manner. Then if the other side accepts your numbers you could proceed via a mutual agreement to buy out your spouse’s interest. If no agreement, then your attorney must present evidence of the value of the home (expert appraiser) and your ability to buyout the existing mortgages plus your spouse’s interest (1/2 of the equity) by demonstrating that you qualify for the larger mortgage.
- Calculating buyout amount. A would-be buyer spouse first needs to get a mortgage equal to the current mortgage or mortgages to buy out the current lender. But the other spouse’s martial share must be bought out also. So the new loan that the would-be buyer is qualified for must be equal to those amounts and any refinance costs and fees (unless you are bringing money to the closing table).
- Effect on your divorce settlement. Please discuss all of this with your attorney because nothing happens in a vacuum in divorce court. If you have enough resources to buyout your spouse’s interest in the marital home, unless s/he earns as much as you do in income, your spouse is probably an alimony candidate and the court will not allow you to increase your expenses unnecessarily. So, if buying out your spouse is “unnecessary” the Court may not grant this relief. Still, there are many reasons why buying out your spouse may be “necessary” or most equitable and a good lawyer can explain this to you before you make any commitments or plans on the buyout.
Mutual Agreement – the best option is always to come to a mutual agreement or settlement on this issue. Knowing the likely outcome in court will help you do that. But there are many variables where disagreement can grow: value of the house, “sweat equity,” any non-marital contribution to down payment or home improvements, how much should the costs of sale be (Ex: actual refinance costs or potential costs of sale described below), and needed repairs. All of these things can be negotiated and discussed outside of court to reach a fair resolution.
About the Author: Mr. Thomas Mulinazzi focuses his practice on family and domestic law. He is an experienced Collaborative Law practitioner, holds advanced training in best collaborative law practices, and he is active in local Collaborative Law attorney groups. You can learn more about his practice by visiting his website at mulinazzi.com