Divorce and the Homestead – A House is Not a Home

Sometimes when a couple divorce, the marital home, as it is called, is the largest asset the couple divides. The family home, the symbol that, during the happier times, became a metaphor of all the hopes and dreams of a marriage that would last, can become very problematic in a property settlement.

In a divorce, the disposition of the family home demands that the couple throw a cold eye on the symbol and realize that it is really only a house, which is a building on a piece of land.

In a divorce, couples normally dispose of the house in one of three ways:

  • They can sell the house, settle the mortgage and divide the equity.
  • One spouse can “buy out” the other’s share of the property.
  • They retain joint ownership by both spouses, with sale at a later time.

Each of these approaches has advantages. Selling the house and splitting the equity is probably the most common avenue. It makes for a complete break, and proceeds of the sale can be used to bankroll a fresh start for the formerly married couple. The spousal buyout appeals when one spouse wants to stay put, but the purchasing spouse may have to refinance the house.  Joint ownership appeals when the couple has children and do not wish to disturb them with relocation. Some couples do not like it because it requires continuing contact between the former spouses.

The disposition of the house requires careful thought. A house is a barren asset that pays nothing until it is sold, and it has many costs (taxes and maintenance) that must be paid until it is sold. Hanging on to a house for sentimental reasons is a decision that can make for financial hardship later.

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