Who Gets the House in a Divorce?

The PropertyClub Team
Jul 30th 2020
While it's relatively simple for a couple to divide their financial assets, you can't exactly split a house in half during a divorce. Here's what you need to know about who can live at the property, and how the process works.

Let’s face it, with over 50 percent of all marriages ending, the dissolution of a marriage or “divorce” is a harsh reality for a substantial number of individuals, and frankly, not all separations end well. In any event, for those individuals who want to cut their losses and move on fast, they should first become familiar with the divorce laws and how both property and debts are divided during a divorce in their state. 

Exactly how is property divided during a divorce? 

It is not unheard of for divorcing couples to decide on splitting their residential property and financial obligations themselves. This can be done with or without the assistance of a neutral third party like a mediator. Choosing this route is called an uncontested divorce or collaborative divorce, and is favorable when compared with dragging the matter out in court. However, if the couple cannot amicably agree, they always have the option of submitting their case to the court in a contested divorce proceeding where the court will utilize state law guidelines to separate the marital assets and marital debt. 

In the United States, courts divide property under either the community property standard or equitable distribution. Similarly, financial debts are divided according to theses very same principles.

Community Property. There are currently nine community property states in the United States. In community property states such as Arizona, California, Nevada, New Mexico, and Texas, all the property of a married person is categorized as community property that is owned equally by both spouses. At divorce, community property is usually divided equally between the spouses.  

Community property includes all income received by either spouse during the marriage. It also includes whatever was purchased with that income. All financial debts sustained throughout the marital relationship unless the creditor explicitly seeks payment for the separate property, are considered community property debts.

A corporation owned by one spouse before the marriage stays his or her separate home during the marriage. However, a portion may be considered community property if the business increased in value during the marriage or both spouses contributed to the business during the marriage. If the separate property is commingled with community property throughout the marital relationship, it may end up being community property, either in part or entirely, depending on the situation.

Separate residential property usually stays that way as long as a spouse can show that some separate funds were utilized. 

Equitable Distribution. In 41 states across the United States (New York included), possessions, and income accumulated during marriage are separated equitably by the court. 

The division of property does not always mean that the court will order the physical division of the property. Instead, the court might honor each person’s percentage as it relates to the overall value of the property. Each partner will obtain personal effects, possessions, and financial debts, which will total the amount to his or her equitable share. 

Some of the factors considered during the equitable distribution of marital assets include but are not limited to, the following: 

  • The number of years the party was married
  • The income or property each spouse brought into the marriage
  • The standard of living of the couple during the marriage
  • The age and health of each spouse
  • The income of each spouse 
  • The earning potential of each spouse
  • The financial situation that each spouse will be in once the divorce is final 
  • The ability of the custodial parent to maintain their established lifestyle for the children

Who gets to stay in the house during a divorce?

As far as who stays in the house during a marriage, this typically depends on the couple’s unique circumstances. In other words, there isn’t a black and white answer to that question. Some couples decide to continue living in the house during the divorce, albeit while living separate lives. While for other couples, domestic violence is an issue, so the couple can’t practically continue living together. 

No matter what you decide, you should first hire an appraisal to obtain your property’s exact value before determining how to split the property or deciding to buy out your spouse. The value of the home should be written into the separation agreement. Likewise, a real estate broker can provide you with a suggestion regarding the value of your home and your local market outlook. Ask your lender what the exact balance of your home mortgage.

If you have agreed that you don’t want to sell the home, you can just pack and go despite your contributions to the monthly mortgage payments. You’ll still be getting your share of the equity of the property as part of the divorce.

Who gets the house in a divorce with children? 

One of the most significant issues that must be considered is the guardianship of the children. Both of you should recognize that your children need to be active in both of your lives. Work out visitation between each other, always considering what’s in the best interest of the children. 

To that point, the main concern is often the house. A common way to go about it is to split the value of your house, deduct the balance of the home mortgage and compute the equity and divided it 50 percent. 

The parent remaining in the home will probably have no option but to obtain a home loan refinance to pay off or “buy out” your partner if you want to continue to reside in the marital home. However, there are some situations, like a stay-at-home mother, who will not be able to obtain refinancing for the home. In that event, the court could order the husband to continue paying for the marital home but give possession of it to the wife and kids. In any event, it gets complicated. As such, you should attempt to persuade your partner to talk about the divorce like amicable adults if you can.  

Things to keep in mind after the divorce

If your spouse receives the house in the divorce and will be paying for the home loan, be prepared. If he or she stops working to pay the home mortgage, your credit score ratings will be impacted, and getting funding on your own will be difficult. Overall, make sure that if only your spouse is bound to a lending institution, she or he is accountable, not you.  

It is best to order your spouse to refinance the property or, if they don’t qualify, to sell it immediately to avoid these credit debacles. This should be written in your settlement agreement. 

In general, filing for divorce and going through a divorce is not easy or cheap. Hiring divorce attorneys, and paying other marital debt can be expensive. Understanding your state’s laws is typically the first step in making the divorce easier to manage.