Often, one of the main assets acquired during the marriage is real estate, whether a house, condo, or coop. What to do with the marital residence is often a major concern and question that clients have to deal with during divorce. You have a few options on how to handle the marital residence.
Sell the House and Split the Proceeds
One obvious option is to sell the property and to divide the net proceeds. This is often the best way to unlock equity in the property so both you and your spouse have funds available to establish a new residence and some savings as you likely transition from a two-income household to a one-income household. Often times, parties split the net proceeds 50/50 but there are other times when a credit to one of the clients is appropriate.
One Spouse Buys out the Other Spouse
Another option is for one spouse to buyout the other spouse’s interest in the marital home. This is usually done by determining the equity in the property and dividing the marital portion of the equity equally between the parties. For example, if you purchased a property during the marriage that is now worth $500,000 and you have a mortgage in the amount of $300,000; there is $200,000 in equity and each spouse’s interest is $100,000. Usually, divorcing couples utilize an appraisal (or the average of two appraisals) to determine the fair market value of the home.
One Spouse Remains in the Home for an agreed-upon Period of Time
Another option is for one spouse to remain in the marital residence for a period of time. It is important that you do a detailed post-divorce budget analysis to make sure that you can afford the costs of staying in the home. At the conclusion of the time period agreed to, you and your spouse can agree to sell the house or either spouse can buy out the other. Of course, you can also agree to extend joint ownership of the house for an additional period of time. It is not uncommon to agree that one party will stay in the marital residence until the children are all off at college and the house will be sold at this point. However, the best scenario depends on your particular facts and circumstances.
Please contact Divorce Mediation Advisors to discuss your options for what to do with the marital home.