In movies, TV, and sad country songs, one party to a divorce is often depicted as having “lost” the house in their divorce. While this depiction can be effective in portraying a character, it is rarely true to life. In reality, there are two likely outcomes regarding the marital residence in a divorce.
Selling the House
The first and fairly common outcome regarding the home (a.k.a. the marital residence) in a divorce is that the parties sell the house. This can be done by agreement at any point during the pendency of the divorce or by court order in the final decree. Often, the parties will split the proceeds. How the proceeds are divided depends on the agreement of the parties or the orders of the Court. If the house will be sold following the divorce, the final decree will include a timeline for the listing of the house for sale. It will also include procedures to select a realtor, set the sales price, adjust the sales price, etc. This outcome may sound like “losing” the house, but the parties are gaining the proceeds from the sale.
Keeping the House
However, depending on the housing market, interest rates, and personal sentimentally, a party to a divorce may want to keep the marital residence after the divorce is finalized instead of selling the home. This leads us to the second outcome: one party keeps the house, and the other party receives their equity in the home in one of two ways: an equalization payment or other assets of the marital estate. Since the marital residence may be the largest asset a divorcing couple owns, the party keeping the house will often be required to pay the other party a sum of money within a particular timeframe to ensure that the division of the marital estate is fair and equitable, which is often known as an equalization payment. Alternatively, the party releasing their interest in the house may receive more assets of the marital estate, such as retirement accounts, brokerage accounts, bank accounts, etc.
So while the party releasing their interest in the house is “losing” the house, they are also “winning” other assets, either through an equalization payment or through the other assets. When the parties agree to one party keeping the house or one party is awarded the house by the Court, certain documents will need to be recorded with the county property records in order to facilitate the transfer of interest in the house. These include a Special Warranty Deed, a Deed of Trust to Secure Assumption, a Deed of Trust to Secure Owelty of Partition, and/or a Real Estate Lien Note.
Love It or List It?
Your house is your home, and it can be a sensitive topic when there is a pending divorce. If you have any questions about your options regarding your house or what the process of keeping or selling your home will be in a the event of divorce, please feel free to contact our office and set up a consultation with one of our attorneys.
