Divorce and Your House

Divorce can be messy, costly, and more than emotionally taxing, and it is also one of the leading reasons that homeowners choose, or in some rare situations are forced to sell their house. 

During a divorce a couple is required to make agreements on marital assets, such as a marital home. And while there are options available to allow you to keep a home during a divorce, the typical result is the eventual sale of the marital home. 

What happens to a house during a divorce? 

Divorcing spouses as typically required to divide their assets, including any real estate the couple may own. How you purchased the house and what state you live in will determine how proceeds and rights are split, but for the purpose of this article, we will stick to Florida as it is our primary market! 

Additionally, a couple can always elect to settle their assets outside of court. If the divorce is civil and both parties can mutually agree on an arrangement, you determine what course of action makes the most sense for your home. 

The most common outcome for a marital home during a divorce is the required sale and division of sales profits based on an order from the court. 

Is my house marital property?

Typically marital property includes anything acquired or purchased during the time that the individuals were legally married. In most cases, real estate, such as a marital home will be considered marital property. 

Rarely, if a home was owned by one party prior to the marriage, and their spouse’s name was never added to the deed, it may be considered separate property. However, this usually only applies if a state is considered a “Community Property State”, these Community Property states include California, Idaho, Louisiana, Texas, Nevada, Wisconsin, Washington, New Mexico, Arizona and Alaska. 

The other 40 States are called Equitable Distribution States, and Florida falls into this category. 

What happens to a home in an equitable distribution state?

In an equitable distribution state like Florida, a judge during the divorce proceedings will determine who gets what assets and shares of any asset, or profit distributions based on a number of criteria including: financial contributions, income, earning potential, and marital faults on behalf of any party. 

An equitable distribution state doesn’t necessarily mean everything will be split equally, which can be a huge hassle when dealing with an asset such as a home. 

Prenuptial agreements

Prenuptial, and occasionally post-nuptial agreements are legally binding documents signed by the spouses detailing who keeps what assets and debts in the event of a divorce. 

These agreements are typically used when one party enters a marriage with more assets or more valuable assets than their spouse. They remove any question around the divison of assets after a divorce, and can simplify the decision of what to do with a marital home. 

Options for your home during a divorce

1. Buy out your spouse 

During a buyout one party pays the other for their share of rights to a home in order to  become the sole owner. Depending on what kind of state you live in, this buyout may be more or less than half of the fair market value of the family home, again depending on factors such as financial contributions, income, and earning potential. 

This can be a great option for spouses with private capital who don’t wish to move or sell their marital home. However, in most situations this option isn’t viable as it requires access to a large amount of funding not subject to the rest of the divorce proceedings. 

Additionally, you will still have to pay the mortgage, and will be liable for any mortgage balance left on the home, despite the amount paid to a spouse during the buyout. 

2. Split large assets

In the event that the divorcing couple owns multiple large assets such as: vacation homes, rental properties, vehicles, retirement accounts, stock portfolios, or boats, the spouses may be able to divide these assets based on overall value at the discretion of the presiding judge. An example would be one spouse taking a stock portfolio worth an equivalent amount to the home, rather than dividing each individually. 

However, it can be difficult to place accurate values on each of these assets, and any disagreement can prolong the divorce process and increase associated costs. 

3. Co-own the home

If the divorce is amicable between both parties, the spouses may determine that they don’t want to divide their ownership of the home at all, and may continue to co-own the house as they did during their marriage even after the divorce is finalized. Each will still be included on any mortgage, and will be responsible for paying the mortgage balance if any exists. 

In most situations spouses don’t want to deal with the hassle of co-ownership, and if either spouse wishes to sell their home after the divorce is finalized, they may have to engage the help of real estate attorneys to negotiate the home sale. 

4. Selling the home

Typically the best course of action for divorcing couples is to simply sell the home.  Please note that most states, including Florida have Standing Family Law Orders which prohibit either party from selling or disposing of any large asset prior to the judges ruling, without a mutual agreement. 

It is also worth considering that in some states the spouses may be required to pay capital gains taxes on any profits realized after the sale. 

Ways to sell a marital home after a Florida divorce

One option is to hire a real estate agent, determine a list price, list the home, stage the home, and sell the home on the open market. However, this is often a long process, and in the event of a contentious divorce, may add to the emotional and financial burdens of the spouses by prolonging the need for their communication and cooperation. 

The other option is to sell a house as-is for cash. A reputable buyer, such as Duval Home Buyers can offer cash and a short closing time frame, without the need for real estate agents, listing, or staging. This is a great option for those looking for the shortest path to sell! 

Selling after divorce can be a painful and difficult process, but there are steps that can be taken to reduce the burden. Check with your divorce attorney, and consult local real estate experts prior to making any decision!