By Nathan A. Hacker
What do you do with the marital home when you’re getting divorced?
There a few options and some things you should be aware of before you sign off on any agreement with your wife.
The following is a list of 5 tips to consider when dividing your marital home during a divorce:
1. Quitclaim Deed: Let's start out with a warning: just because you have executed a quitclaim deed, you are not absolved from responsibility for the money owed on the house.
For example, Alice and Bob are getting a divorce. They own a home with at least 20% equity. Both are gainfully employed.
If Bob agrees to execute a quitclaim deed to Alice, he will lose his claim (i.e. he quits his claim) on any value of the house. This does not mean that he is not responsible for the mortgage, taxes, and insurance that he has otherwise contracted to pay.
Execution of a quitclaim deed doesn’t mean that creditors cannot come after you for their money. You will likely be asked to fill one out should you have your name on a mortgage and you are not going to remain in the marital.
2. Refinancing: Given that Bob and Alice (yes, the same ones from above) have 20% equity and Alice is keeping the house, Alice can use Bob’s quitclaim deed and the equity to refinance the house solely in her name.
This will alleviate Bob from having responsibility to pay any taxes, mortgage, or insurance.
Divorce Tips For Men:What To Do With The House
3. Appraisal: You need to have your house, and any other asset of significant value, appraised by a professional who can attest to the value in court or by affidavit.
A real estate appraisal is not a realtor’s suggested price, but rather an evaluation of comparable homes and their asking and sale price as well as a comprehensive listing of amenities and features of the home that support the comparison and can also be used to distinguish from other homes.
Lastly the evaluation should include a price. Recent changes in the law have required many appraisers to follow stricter guidelines and many houses have been valued much lower than owner expectations. If you are guessing the value of your house, it’s likely you are guessing high.
4. Child Support: Do not agree to tie a child support obligation to a mortgage payment.
Many judges will not allow this anymore, but divorce lawyers will still occasionally come across a case where a dad agreed to pay the mortgage in lieu of child support.
Here’s an example: During the housing boom, a married couple purchased a house on an Adjustable Rate Mortgage. They got divorced before the adjustable rate kicked in and agreed to the mortgage in lieu of child support. Now the ARM has kicked in and the dad’s child support has jumped, but he’s not making any more money.
Fortunately, this can be fixed and there are also fewer and fewer judges that will sign off on this anymore. The solution is to simply agree to pay child support through some other mechanism that shows you are consistently paying it.
Tying your child support payment to your former marital residence is only going to hurt you in the end. If you had just paid the child support anyways, mom could have just paid the mortgage.
5. Forced Sale: Yes, this can happen. Should the court become tired of your needless bickering or inability to reach a resolution on the house, the court can order the marital home to be sold. This comes up most often when the parties cannot agree on a value for the home.
The market is the ultimate judge of what a house is worth. See No. 3 above regarding the value of an appraisal. If you have reason to believe you know what a house is worth because you have paid to have a reputable appraisal, you are in a better position to agree or allow the judge to put it up for sale.
The judge may first order it to be sold at the higher of the two values proposed for the house. If it cannot be sold at that price, the court may decide to appoint a commissioner to set a price on the house. This means that a third party will pick a price and try to sell the house at that price. If it does not work, the court can force it to auction.
Keep in mind that all of these things are going to cost money. Realtors aren’t free (most take their commission from the seller's share), commissioners have fees, and auctioneers may take a percentage as well.