DIVORCE—SHOULD YOU KEEP OR SELL THE HOUSE?

The marital home can be one of the more complicated assets to handle; simply because it is an emotionally charged one. With the help of experienced counsel, one can make a logical decision that works for the whole family. Let me break down some of the options available:

What happens if you decide to sell the house? If the couple decides to sell the home, they will split any money made in the sale. This is determined by how much the home sells for, minus the cost of the remainder of the mortgage, realtor fees, or any other expenses incurred from selling the house.

If the house is still on the market, but every other aspect of the divorce has been agreed upon, the spouses do not need to wait for the house to sell to finalize the divorce. Instead, the marital settlement agreement can clearly outline how to split any funds from the sale of the house. Often, it will also dictate how the parties will communicate with the realtor, respond to offers, and maintain the house while it is on the market.

What happens if you decide not to sell the house? If the spouses decide not to sell and that one of them will keep it, this becomes much more complicated. First, the couple needs to determine the value of the house. They can agree to use a website like Redfin or Zillow or a current market analysis from a local realtor to determine the house’s worth. If they do not agree on the value, they can get an appraisal from a certified real estate appraiser. Each party is entitled to half of the home’s equity in the divorce. If the parties are unable to come to an agreement on the value of the home, and therefore the equity in it, the court will most likely order that it be sold.

If one party keeps the house, they are responsible for compensating the other party for their share. This can be done by giving the spouse a different asset of a similar value, splitting checking or savings accounts differently, or paying the other spouse in another way. Additionally, the party keeping the house will need to refinance, removing their spouse from the mortgage and the deed within a reasonable amount of time.

Can you continue to own the home jointly? In some cases, the parties may decide to continue jointly owning the home for a few years. Typically, this is done to allow children to stay in the same home and school district they were previously in.

Sufficed to say, there are many ways to divide the value of the familial home. However, this can often be a contentious issue because in addition to the home typically being the largest asset they have, it is also one that people tend to be very emotionally attached to and oftentimes, people will make emotional, rather than logical or smart, decisions when they want to stay in their residence.

Although it is difficult, we urge clients to take a very close look at their finances before determining if staying in their home is a realistic and smart financial decision. Many times, their emotions can cloud the reality of moving from a dual income and the major monthly expenses of owning a home. However, in some cases, staying in the home is the smartest decision for one party—the mortgage payment may be extraordinarily low, and they know they won’t be able to afford something similar with rising real estate prices.

Regardless, whether or not to stay in the home is a serious financial decision that should be made logically with legal counsel.

Michone J. Riewer is an attorney with Strategic Divorce in Lake Bluff, 847-234-4445, strategicdivorce.com.