After a divorce, it is common for the marital home to be sold unless one party wants to buy out the other party’s interest in the home, or if the couple has young children and the couple can afford to maintain the home for them.
To the extent the party’s agree or there is a court order directing the sale of the home, there are two options to proceed. The first is for one party to buy out the other. The second is to sell the home and equally divide the money after payment of marital debts, taxes and fees unless there are unpaid support arrears or there is some other agreement by the parties regarding the disposition of these proceeds.
One spouse buys out the other spouse
The first step is to get the house appraised. In a steady real estate market, an appraisal is likely to be undisputed. However, in a high demand market where prices are inflated, the value of the home may be more difficult to ascertain. In the event of a disagreement over the valuation, typically, a second appraisal is done, and the parties can either average the two amounts, pick one of them or decide to get a third appraisal. If there is a third appraisal, often times, said appraiser will be selected by the other 2 appraisers.
Once the valuation is completed, the buyer should subtract out any separate property contributions he or she made. For instance, if the buyer used his/her own separate property or money from his/her parents that they can prove solely belongs to them, that money would be deducted from the appraised amount.
Next, the parties should subtract the remaining amount left on the mortgage, if any.
Finally, the buyer should pay 50 percent of the amount left over after deducting the separate contribution and mortgage.
Sale by both spouses
If no one wants the marital home, the parties can sell it. In that case, before sales proceeds can be divided, the mortgage, attorney’s fees and other relevant costs must be paid and any separate contributions by either spouse should be deducted. Thereafter, the net proceeds are typically shared equally.
If you are considering divorce, contact us to discuss how we can help you achieve the best result in your matter.
