What Happens to my House in a Divorce?

What happens to my house in a divorce?

Many times, real estate is one of, if not the largest asset to divide in a divorce proceeding, and typically, divorcing spouses have only one marital residence to divide. Assets such as bank accounts, retirement and investment accounts are easier to allocate between parties as funds within those accounts can be transferred or cashed out. Houses are a bit tricker, as they tend to come with accompanying mortgages and other ongoing expenses and so the analysis for who gets the house after the divorce is a bit more complicated.

One of the first issues to determine regarding any real estate is whether a property is marital or non-marital. Sometimes, a married couple will reside for many years and use marital funds to pay a mortgage on a home that was owned by only one party prior to the marriage. Such property is likely one person’s non-marital property, but a proper analysis is key. In certain situations, non-marital property can become marital property, or, at the very least the marital estate may be entitled to reimbursement for contribution to a non-marital property. If you own non-marital property or if your marital estate has contributed to your spouse’s non-marital property, you need the right team on your side to protect your interests.

Once a property is determined to be marital, the division of that property requires a value to be set. Obtaining a proper appraisal may be necessary to determine the equity (the value minus the outstanding mortgage) in the home. The next issue to determine if you want to keep the property after a divorce is whether you can afford the mortgage on the property after a divorce and whether you qualify to refinance the property after a divorce. Refinancing the mortgage may be required to remove a spouse’s name from the mortgage or to cash out some of the equity to provide one party their share of the equity. If a spouse is not working and entitled to maintenance and/or child support, working out those details early in a case may assist with qualifying to refinance. As divorce attorneys, we work with professionals in the mortgage industry to assist us in determining what our clients need to be able to qualify to keep the home.

Both parties are entitled to a share of the equity in a marital home. The Court will divide marital property in an equitable manner after considering many factors. (750 ILCS 5/503) Whether a party will be required to pay the other party any equity will depend on other assets and/or possible maintenance in a case. If both parties want to keep the marital residence and there is no agreement as to who will keep the property or if neither party can qualify to refinance in their sole name, a Court may order the property to be sold.

Finally, another common and important determination, often which needs to be made at the beginning of a case, is who can and will live in the property while the case is pending. Even if a house is a non-marital asset, a person who lives there has some rights to continue residing there for a certain period of time. If there are children involved and/or if maintenance (formerly known as alimony) is at issue, continuing to reside together pending a divorce may be a discussion worth having. If parties cannot remain amicable and living together is untenable, safety and peace of mind is always preferred. In those situations, and where someone’s mental or physical well-being is at risk, a Court may determine that one party is entitled to exclusive possession of the property. However, in any case, before parties do live separately, it’s best to have a plan for support and parenting time, if applicable.

Regardless of your specific situation, if you are considering a divorce and you or your spouse owns real estate, you should speak with a knowledgeable divorce attorney who has a team of resources available to help you through your divorce.

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