Divorce and the Marital Home

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A Couple’s House Is Usually Their Biggest Asset

by Michael Heath

Like working out child custody issues, what happens to the physical residence is among the most significant divorce decisions. Emotional ties are often meshed in with the practical considerations. There are important decisions to make, and it is key to bring in the right people.

What Happens to the Marital Home?

If the home was owned by one spouse before the marriage and a prenuptial agreement is in place, then that spouse will likely keep the home. However, a married couple holding title to the residence in which they live almost certainly own it equally. There are three ways in which the marital home can be dealt with:

  • Sell the home: the home can be sold with the proceeds divvied up equally or unequally
  • Arrange a buyout: one spouse compensates the other to become the sole owner
  • Co-own the home: the spouses continue sharing ownership of the home, even after the divorce

Selling the marital home and sharing the proceeds is the most straightforward option. An arranged buyout can work if the one spouse has the resources to do so. Often it is too much for one partner to take on the mortgage payments and upkeep by themselves. Co-ownership is more common when children are involved. There may be a hesitancy to disrupt the status quo. The intent could be to keep the children in the local school system. There may be an expiration date to such an agreement; e.g., the home must be sold once the children complete high school.

Co-ownership can get complicated for divorced couples. Disagreements over maintenance and other issues often creep into the dynamics. When it is time to sell the home there can be major stumbling blocks if the spouse in the home has trouble arranging new housing.

Real Estate Agents Specializing in Divorce

There is an accreditation known as a Certified Divorce Real Estate Expert for those who successfully complete extensive training focusing on real estate transactions involving divorce. It is a relatively new certification so finding a certified agent may not be easy. But it does show that the profession acknowledges that selling and buying real estate where divorce is in progress requires its own skillset. Agents must be extra careful in being transparent to both sides. It is often a good idea that the real estate agent agrees not to represent either spouse in the eventual purchase of a new home so as not to appear partial to one side over the other.

A seasoned professional will hold back personal information that could lead prospective buyers into believing the sellers are extra motivated, resulting in low-ball offers. An experienced agent will also be considerate of the children’s sentiments as it is their home too. Broker Trisha Gannon Norkus relates the story of an agent who had a door slammed in her face by an eight-year-old who knew that the woman was at the home to discuss selling it.

Call in the Experts

If a like-kind property is purchased after selling the home, capital gains can be deferred through what is called a Section 1031 exchange. Although the real estate agent will be familiar with this section of the IRS Code, it is not their expertise. Get your critical information from a specialist. Other professionals should be involved in the home sale and may include a CPA, appraiser, title agent, and lawyer. An adept agent along with a team of experts will lessen the stress of this important transaction and result in a successful sale.

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