WHAT HAPPENS TO THE MARITAL HOME AFTER DIVORCE?
In a divorce, the marital home is typically the largest asset owned by a couple, meaning that it will be the centerpiece of the property division in the divorce. This also means determining what will happen to the home can quickly become strongly contested. Arguments over how to divide the interest in the marital home can quickly destroy any amicable feelings left between the spouses and derail negotiations regarding property division. Below is an overview of how the court determines what happens to the marital home.
Property Division: A big part of every divorce proceeding is the division of property between the spouses, including property that is acquired during the marriage (marital property) and property that is acquired prior to marriage or individually as a gift of inheritance (non-marital property). The court will make an “equitable distribution” of all the property. This means that the property will be divided in a fair and reasonable manner, rather than equally divided in a 50/50 split. Equitable divisions rarely result in a 50/50 division. As long as the spouses can work together to compromise about property division, a settlement can be reached. However, if no settlement is reached, then the court will have to determine how to divide the property following a trial.
When determining how to divide property, the court is instructed, per statute § 23-2802(c), to look at a set of ten factors. These factors are: (1) age of the parties; (2) length of the marriage; (3) marital and non-marital property classifications; (4) present/future earning capacities of each spouse; (5) time, source, and manner by which the property was acquired; (6) family ties to property; (7) spousal support obligations (alimony); (8) squandering of assets by either spouse; (9) tax consequences of property division; and (10) all other relevant factors. The court uses these factors to determine how to divide the property as a whole, as well as which individual pieces go to which spouse.
Options for the Marital Home: In the end, the home will be given to either Spouse 1, Spouse 2, or sold on the open market. The court may allow one spouse to keep the home as part of the property settlement. If one spouse gets to keep the home, the court will generally require that spouse to compensate the other spouse for the ownership interest or equity that spouse owned. Even if the spouse never directly made payments for the home, he or she will still be compensated. The court will grant credit to a non-working spouse based on the advantages that spouse gave the couple by foregoing work or education to maintain the homestead. This means that a nonpaying spouse will still receive compensation even if the home is paid for exclusively by one spouse. This may also be true if one spouse owned the home outright prior to the marriage.
If the home is not given to either spouse, then the court will sell the home and divide the profits between the spouses. Courts typically favor giving the home to one of the spouses, known as a partition in kind. However, the court will sell the home if the parties prefer that option, cannot agree on who should own the property, or the factors of § 23-2802(c) do not favor either spouse. Selling the home is generally reserved for extreme cases because it is the least favorable outcome for the court. Once the home is sold, the money will first go towards paying of any existing mortgage. The remaining money will be divided between the spouses as instructed by the court. There is no guarantee that the division of the money will be 50/50.
Avoid Losing the House: Property division can be reached by agreement of the spouses; the spouses can propose a property division to the court, and the agreement will become binding upon the spouses once approved by the court. This can be an easy way to ensure that one spouse keeps the house because the spouse can negotiate and be willing to give up other things, like other property and spousal support in return for getting to keep the home. On the other hand, when the division of property is left to the court, there is a large degree of uncertainty. The decision the court makes may leave both spouses unhappy, even though the court does not deliberately make decisions to upset the spouses. The spouses are in the best position to determine how they would like to divide the property since they are more familiar with the property than the court. An experienced attorney will use this knowledge to pursue compromise and settlement because that will almost always be a more favorable outcome than rolling the dice with the trial judge.
One of the many questions that a couple will face when deciding to divorce is what will happen to the marital home. When this issue is being decided, tensions can be extremely high for both parties. That is why contacting an experienced attorney is essential. Property agreements are best resolved through agreement, rather than taking a chance with the trial judge. Having an experienced attorney will place you in the best position to negotiate to keep your home after a divorce. Reaching a settlement when spouses strongly disagrees takes more than just legal knowledge. This is where hiring an attorney with experience from reaching several property settlements and trying several divorces before the court will be critical.