Divorce ranks as life’s second most stressful event, and decisions over what to do with the family house drive some of the most heated disputes between couples parting ways.

Beyond the emotional ties to a home, shared real estate comes with an intricate maze of legal strings that have to be sorted out before the dust can settle. It’s a bit more complicated than, say, splitting up the wedding china.

However, with over 827,000 divorces recorded annually, you’re not the first to face the tricky divorce real estate questions keeping you up at night.

Let’s go through them one by one, and tackle your top concerns with help from professionals in the field who have a combined 50 years of experience.

by Amanda Hanna Posted onNovember 27, 2018 10 min read

1. Are you in a community property or equitable distribution state?

According to Divorce Net by Nolo, one of the leading websites for legal matters, “the courts will divide your assets under one of two basic schemes: community property or equitable distribution.”

Community property (minority of states):

If you live in a community property state—Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, Wisconsin, and Alaska*—and your house, classified as community property, was acquired during the marriage, the proceeds from the sale are split strictly and equally 50-50.

If one spouse bought the house before the marriage, however, that is considered separate property and will not be split.

Because divorce is governed by state law as opposed to federal law, there are exceptions to these rules. MaritalLaws.com, an online resource for divorce, custody, child support, visitation, property division and alimony laws, provides the divorce laws of each state with an easy, interactive map and all the fine print in one place.

*Note: Divorcing couples that live in Alaska can opt-in to a community property system or default to an equitable distribution system.

Equitable distribution (majority of states):

If you live in one of the remaining states, the property acquired during the marriage will be divided fairly and equitably based on factors deemed by the courts.

According to Legalzoom, the leading online provider of legal solutions and documents, such factors include:

How much each spouse earns currently
The earning potential of each spouse
The value of a spouse staying home or raising the kids

James L. Powers, a Chicago-based attorney with 32 years of experience who represents between 30 to 40 divorcing clients every year, says that while there are slight differences, at the end of the day the laws of community property and equitable distribution states do remain fairly similar.

2. Should you keep or sell the house?

Ideally, this comes down to what you and your spouse can decide together.

However, if emotions are high and it’s difficult to have a conversation or come to an agreement, there are laws on the books that can force a particular outcome, depending on your state.

You may want to keep the house if:

You have children and don’t want to uproot them.
You have strong emotional ties and memories associated with the home.

You may want to sell the house if:

You can’t afford the payments and home upkeep.
It’s too emotionally painful to live there after the divorce.

The decision to keep the house or sell it is part emotional and part financial. Sometimes our wants aren’t financially feasible—especially when it comes to the outcome of the house—which is why cooperation goes a long way in this situation.

Fran Williams, a top real estate agent in Lakeland, Florida, with 18 years of experience working with divorcing clients, says a divorcing couple should reach out to a real estate agent after they’ve consulted an attorney and made the decision to sell the house.

If you’re still in the argument stages, you may find it difficult to get an agent to work with you.

“If you’ve got a belligerent situation, and one party says they’re not going to sell no matter what—that they’re going to sabotage this process—then I don’t even list the house,” says Williams. “If it’s court-ordered, that’s a different situation. They have to cooperate.”

3. Should you buy out your spouse’s share of the home?

Buying out your spouse’s share of the house to assume full ownership makes sense for several reasons:

You have children and want to maintain the stability of the family home.
The house is in an ideal location and near your work, family, and friends.
The market conditions aren’t ideal right now to sell.
You bought the house recently and haven’t had much time to build up equity.

Real estate attorneys say it’s usually the case that one or both spouses want to keep the house, but the real question is if either one of them can afford to do so on their own.

Typically the spouses have qualified for their mortgage amount together, and only one or neither may qualify to take over the mortgage independently. In that scenario, the person who gets to keep the home is the one who can come up with the money to buy the other out.

That can be a challenge when all of your assets, including your savings, are getting split during the divorce.

4. Will my divorce settle or go to trial?

Lawyers.com, a legal consumer website from Martindale-Hubbell, reports that “more than 90% of divorce cases settle prior to trial—either by one spouse offering a settlement that the other accepts, or at mediation.”

If you and your spouse can agree on how to divide assets, you can negotiate a settlement agreement between the two of you without the assistance of an attorney. This is known as an uncontested divorce and could save you time and money.

However, while Powers says that couples can choose this route, it’s not necessarily in their best interest.

“As it relates to drafting a marital property settlement agreement, I think an attorney is necessary because we’re dealing with issues or finances that people don’t know about—even down to making sure that there’s a full disclosure of all data,” says Powers.

Since an attorney can only legally represent one spouse in a divorce case, due to a conflict of interest, the benefit of both parties cooperating and coming to an agreement is huge.

“When you’ve heard people say ‘We only got one attorney,’ it’s usually people who’ve reached an agreement on their own, and one of the parties hired the attorney who then represents that party and drafts the documentation. But, technically, the other party is pro se which means they represent themselves,” Powers explains.

If you and your spouse can’t agree on who gets to keep the house, an experienced attorney will guide you through the process and the fine print of your state’s law.

5. What happens to the mortgage after you divorce?

In the wake of a divorce, one of two things typically happens to the mortgage on joint property: you sell the house to pay it off and each spouse collects their share of the net proceeds, or one spouse takes full ownership of the house by refinancing the mortgage under their name.

Of course, the spouse assuming ownership will need the necessary income and credit score to qualify for the new loan.

The process gets more complicated if a divorcing couple is underwater on their home, meaning they owe more on the house than it’s currently worth, or if they’re facing financial hardship.

“Maybe the husband quit paying the mortgage and they’re behind, so short sales are a possibility,” says Williams.

Short sales occur when the lender agrees to let you sell your home for less than you owe on the mortgage in lieu of foreclosure, and they require a special niche of real estate expertise.

“In one case, we dealt with the bank directly, which the person was very grateful for,” Williams ads. “We were the go-between. Because they were so far behind in the mortgage and because divorce often results in financial disaster, at least they had that option.”

Source: (Allie Lehman/ Death to the Stock Photo)

Seasoned Pros Answer Your Top 15 Divorce and Real Estate Questions