Equity in the Marital Home During Divorce
A primary issue faced by many couples that are going through a divorce is what to do with the marital home. The issue is an emotional one for many couples as well as a financial one — the marital home is often the most valuable asset owned by a couple and has years’ worth of memories tied to it as well. Due to the state of the housing market over the past few years this issue has grown even more complex. In an “up” housing market divorcing couples are more likely to divide the equity in the martial home and move on. Today’s market however is far from “up,” making the marital home a liability in some cases rather than an asset.
It can be very difficult for couples to make a sound financial decision regarding the marital home, although there are essentially three choices:
- Sell the house
- Keep the house
- Keep the house and agree to a future equity distribution
If neither party has the financial ability to keep the house due to limited income, selling could be the only clear choice in order to divide the marital assets in an equitable manner. Should the parties agree — or be court-ordered to sell — the property would be listed with a realtor and the proceeds from the sale would be held until an agreement is in place. In some cases divorcing couples may choose for one party to buy out the other’s equity in the home. There could even be an exchange between other marital assets such as automobiles, stocks, bank accounts and retirement funds for full interest in the marital home.
Finally, the divorcing couple could maintain joint ownership of the residence as an investment, renting out the home and agreeing to sell when the market improves. The problem with this strategy is that it ties the divorcing couple to one another financially until the sale of the house. If the divorce is relatively free of rancor, this could be the best option. Supposing the mortgage is upside-down — then what? This certainly leaves fewer options, as there is no equity so a sale is basically out of the question.
Couples who are finding it difficult to negotiate what they should do with their marital home or with other assets need the services of an experienced divorce attorney. An experienced divorce attorney will sit down with you and lay out the best course of action available to secure your financial future.