Your house is probably the most valuable asset of the marriage. It can drain marital assets with litigation or provide financial security through agreement and cooperation.

Upon divorce, there are three choices regarding the house, which are outlined below from the simplest to the most complicated:

(A) Sell the House

Sometimes the easiest solution is to sell the house and split the proceeds. Many couples choose this option when:

          • there is a substantial amount of equity tied up in the house, and

          • the mortgage payments are, or will become, unduly burdensome for one person  to carry. 

Ask several real estate agents for listing presentations that include an estimate of value. Agents don’t charge for this service since they hope to list your house. (See Why Divorcing Couples Need a Realtor/Facilitator). Also, it might be helpful to find an agent with experience juggling the emotional and financial needs of divorcing couples.

          Divorce Tip: Work with, not against, your spouse in selecting an agent and selling the house. (See Selecting a Realtor/Facilitator: Interview Tips).

(B) Keep the House (and Refinance)

You or your spouse may keep the house through a “buy out.” The selling spouse usually insists on 1) receiving fair market value for his share, 2) refinancing the mortgage in order that his name may be removed from the mortgage note, and 3) quickly receiving his money, usually through increasing the size of the old mortgage.  (See Keep the House and Refinance the Mortgage).

          Divorce Tip: Valuations can get messy as couples often disagree over both home values and their respective shares. Note that the remaining spouse will need to qualify for a mortgage without the signature of the selling spouse. However, lenders will take into account both alimony and child support.

(C) Do Nothing

You could maintain the status quo -- the house is neither sold nor refinanced. Instead, the “move-out” spouse agrees to wait a certain number of years before the house is sold, often a time frame that coincides with the children’s emancipation. Superficially, the status quo solution sounds attractive, but most lawyers are wary.

          Ask Yourself: Who pays for the new roof? How do you define maintenance and repairs vs. capital expenses? Is there a formula built into the final sharing of proceeds that reflects all contingencies?

          Divorce Tip: Be extremely cautious of this scenario. Seek the advice of counsel and make sure you have a cooperative relationship with your soon-to-be “ex.”

Related Article: Legally, Who Gets the House?