The person who gets the house is based on three factors:
- If one spouse wants to keep the house
- Who a judge deems fit to have the home if both spouses want to keep it (assuming neither person can come to an agreement)
- Both people want to sell
Because a home is likely the most expensive thing you and your spouse own, you’re right to be concerned about what happens to your house when you get divorced. So if you’re facing divorce and want to know what could happen to better prepare, below we walk you through a detailed explanation of each common situation.
But before we talk about how property is split in a divorce, you’ll need to know what community vs. common law property is and how it applies to marriage. Depending on the state you live in, this could change.
Community vs Common Law Property
Community Property is the idea that you and your spouse are one unit, so any property acquired in marriage is shared. So if you bought a boat, your spouse would own it too. Community Property is not recognized across the entire USA, so you’ll want to check with your state to see if you live in an area with it.
Common Law Property is the idea that anything you buy during marriage still belongs to you. You won’t have to split it with your spouse unless their name is on the deed, too. If you buy a boat in a Common Law Property state, it belongs to no one except yourself.
If you are uncertain about whether your state has Community or Common Law Property, it’s best to consult a divorce attorney for up-to-date information.
Division of assets is simple in Community Property States. In divorce your possessions are split 50/50, and property from before the marriage belongs to the spouse who bought it.
If you live in a state with Common Law Property, things get more complicated. If you and your spouse want the house, you’ll probably go to court.
Now that you know the difference between community and common property, lets go into the three things that can happen to your house with a divorce.
Both Spouses Want the House
When both spouses want the house and neither party can reach a mediated agreement, a court will make the decision for you.
The judge’s decision is normally based on:
- Custody of children
- Earning power of spouses
- Whether alimony is paid
- Age and health of spouses
The benefit of a judge deciding who gets the house is that judges tend to be impartial and will do their best to divide the estate evenly or fairly. But the process does take longer and there is no guarantee you’ll be happy or even ok with the outcome. And the outcome is final.
So what happens when only one of you want to keep the house during your divorce?
Only One Spouse Wants the House
When only one spouse wants the home, they get to keep the property. If your spouse is staying in the house, they will normally give you money and ‘buy out’ the portion of the house you owned. You’re compensated if you don’t want to stay in the house, and no longer have to worry about missed mortgage payments hurting your credit score. And vice versa if you keep the house. This is defined in your marital settlement agreement.
This document outlines who gets the house in the divorce, when they need to refinance the mortgage, and what the other person gets in return. This agreement makes your decisions regarding the house official. And there are benefits and negatives to being the person that keeps the house in a divorce.
Benefits of keeping your house:
- Stability for children involved
- Both spouses are compensated
- No costly court fees
Downsides of selling your house:
- One spouse may feel they got an unfair deal
- May not get full value of house
If neither you nor your spouse want to keep living in your home, that brings us to your third option, sell it!
When Both Spouses Don’t Want the House
When both spouses don’t want the house in a divorce, they can sell it. You and your spouse can find an agent and list the property as you would normally. Or if you want to be rid of the house as soon as possible, you can sell your house for cash to a reputable homebuying company.
Whatever you decide, make sure to detail the decision in your Marital Settlement Agreement. Just like above, this is the legally binding agreement that defines what you and your ex get to keep, so make sure you are happy or at a minimum ok with the wording and language. It is final.
Things to Know if You Keep Your House During a Divorce
Before you decide you want to keep your house when getting divorced, you’ll want to make sure it is the right decision. Holding onto memories doesn’t mean it is a smart choice, and sometimes leaving your comfort zone can help you move on with your life. Houses are expensive and if you are not the bread winner and cannot afford the payments, bills and taxes, you could lose everything when the bank puts you into foreclosure.
Ask yourself?
- Can you keep paying mortgage, utilities and maintenance on the home?
- Are you staying to hold onto the past, or are you staying because you’re scared to move forward?
- If you have kids, is there a better school district or is this the right one for them?
- Will you be happy in the home in 5 years and when you’re too old to move again? This is the most important one.
Deciding who gets the house in a divorce isn’t always easy, but there are always options. You can keep it and pay your ex whatever their fair share is worth, you can have them pay you, let a judge decide, or both of you sell it. Either way there will be a decision made, so the best option is to find one that you can live with, even if it isn’t perfect.