Dividing Real Estate
It is a fact of life that many divorcing couples decide to sell their home at the time of their breakup. Even though a home is often the greatest single asset a married couple owns, it can also become the greatest single point of contention in a divorce. A home has both financial and emotional value, and what happens to the house after a divorce can be a real problem when the emotions over ride the financial considerations. Whether a divorcing couple decides to sell their home or not, the decision should always be weighed against the long-term financial aspects and not based on reactionary emotions at the time of the divorce. Before any final decisions are made on disposition of a house, it can be a good idea to consult a divorce attorney or financial planner about the legal and financial ramifications of the sale.
Once the decision to sell is made, you’ll need to determine the value of the property and this will require hiring an appraiser or a licensed real estate professional to determine a value for each piece of real estate owned. You’ll also need to determine the amount of equity, if any, that you have in the property. This is easily accomplished by subtracting any loans, mortgages, or secured lines of credit that may be attached to the property from the current real estate market value. The amount left after deducting the loans is your equity.
The decision to sell your home might also hinge on the amount of expenses it would take to keep the home and maintain it. In addition to the mortgage payments, expenses like property taxes, insurance, association fees, gas, electricity, and water bills can add up to a significant load very quickly and might be a lot more than you imagined. If you do want to keep the house on your own you may have to get a new mortgage to buy out your spouse. If you are not be able to qualify for and afford a new, larger mortgage, the house will have to be sold to someone else and you would be entitled to half of the proceeds or whatever your share of the equity might be.
If the home is sold, the proceeds will be divided according to the laws of the state you live in. If you live in one of the ten U.S. community property states that include Alaska, Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin, you will likely receive an even one-half of the proceeds from the sale of your home. If the home is upside-down relative to the mortgage and money is still owed to the bank after the sale, you will be the recipient of one-half of the debt in a community property state as well.
All the rest of the states in the nation are governed by equitable property division laws and in the event of a divorce all marital property will be distributed equitably. Under the laws of equitable distribution the division of property is based on the premise of fairness. Equitable distribution is decided by the court and the judges will attempt to determine what is fair in each individual divorce case by considering several different factors.
The primary factors for determining equitable property distribution can include the following:
* Income of each spouse at time of the marriage.
* Income of each party at time of commencement of the divorce action.
* Property belonging to each party at time of marriage.
* Property belonging to each party at time of commencement of the divorce action.
* The length of the marriage.
* Ages of both parties.
* Health of both parties.
* Needs of parent with custody of children to occupy the marital residence.
* Needs of custodial parent to use or own household effects.
* Loss of inheritance rights upon dissolution of marriage.
* Loss of pension rights upon dissolution of marriage.
* Any court awarded spousal maintenance.
* Claims to or interest in the marital property by the party not having title, including:
(a) Joint action.
(b) Cash expenditures.
(c) Contributions as a spouse to the career of the other party.
* Future financial circumstances of each spouse.
* Tax consequences for each spouse.
* Unfair depletion of assets by either spouse.
* Any other factors the court finds just and proper.
All of the real and personal property acquired by either or both spouse during a marriage is subject to equitable distribution. However, it usually does not include any separate property which was acquired before the marriage or any property acquired as a gift from someone other than the spouse.