What Happens to the House in Divorce?
For generations, homeownership has been the goal for married couples who are beginning their new lives together. For many, these homes will be their single most substantial investment as well as a place where countless memories are created. Over time, the couple may become homeowners but then later find that they no longer want to remain married. This invites the question: What Happens to the House in Divorce?
Who Owns the Property?
Wisconsin is a community property state which means that, in most cases, all marital property can be equally divided during divorce. Therefore, the first question to ask is whether the dwelling at issue qualifies as marital property. Property conveyed by gift or inheritance is typically considered separate non-marital property and will not be divided during a divorce, as long as it has been maintained separately by the spouse. However, if marital funds were used to maintain the property during the marriage, or if the property was titled jointly during the marriage, even inherited or gifted real estate can become the joint property of the marriage. If the home was acquired during the marriage, then it belongs to both parties, unless a prenuptial agreement says otherwise. All assets brought to the marriage are considered marital (even houses owned by one party before marriage).
What is Your Equity?
If you and your former partner have owned the home for several years, there is a likelihood that the property has increased in value and therefore has equity. Even if one party decides to leave the home in the other’s possession, both have an equal right to any equity which has accrued. You should have the home value appraised, and then, if one person is getting the house, that spouse could choose to pay the other their half of the home’s equity. However, there are numerous financial decisions involved in divorce and, in some case, a party may allow the other to keep the home and equity in exchange for something else of value in the case.
What if we Both Want the Home?
When both parties want to keep the marital residence they can either reach an agreement (on their own or through divorce mediation) or ask the court to decide who will get the home. A court will hear evidence from both sides as to the reason they believe they should keep the property, and may ultimately award the home to one party or order that it be sold and that the parties divide the proceeds.
What if Neither Wants the Home?
If both parties decide that they do not want to keep the property, then the two should consult a mutually agreed upon realtor who can determine the home’s selling price. The parties should also have agreements in place regarding who will be responsible for payments and maintenance on the home while the sale is pending and how expenses associated with the transaction will be paid. Ideally, the sale will result in a profit which can be equitably divided between the parties. However, you should also be prepared for how expenses will be allocated if the home is sold at a loss.
Is Keeping the Home Right for You?
When a divorce begins, it can feel as if everything in your world has been turned upside down. Remaining in your home can be grounding at a time when significant decisions about your life seem to be beyond your control. All of that being said, you have to take a realistic look at your finances and consider what it will be like to pay the mortgage, bills, and maintenance on your own. You will also need to evaluate whether staying in the home is more about your emotional comfort rather than a sound financial decision. If you find that paying for and maintaining the home is beyond your means, you may need to consider other options.
Deciding how to manage real property interest during a divorce can be complicated. Attorney Karyn Youso has extensive experience in assisting clients with marital property division and can help you understand the possibilities concerning your home. Contact us today to schedule a consultation.