Home. It’s where memories are made. It’s where you lay down your head at night after a long day. It’s where you feel comfortable and safe. Though, if you have recently legally separated from your spouse, your “home” may feel more like a “house” these days. Some family law clients hold on to the idea of keeping the house, while others can’t stand the thought of returning to a place that held so many memories. No matter what, a decision has to be made as to what happens to, what will soon be called, the “former marital home.” Knowing your options, and thinking through each possible scenario, can help alleviate some of the anxiety and unknowns that come along with making this important decision.
Equitable Distribution involves the division of assets and debts owned by married couples as governed by the North Carolina General Statutes. What happens to the former marital home is one of the biggest issues addressed in equitable distribution cases. The goal is to effectively divide all marital assets and debts so that a husband and wife are no longer connected by their marital property. When it comes to the distribution of the former marital home, there are often two basic options.
One Spouse Keeps Home
Your first option is that one spouse keeps the home. While this may seem like the easiest concept, it can be complicated. Two major issues to consider are the debt owed on the home, typically through a mortgage or home equity line, and the value of the home. If there is a mortgage or equity line associated with the former marital home, then the party who receives the house may have to assume responsibility for it. It may be that the spouse keeping the home is already solely responsible for the mortgage and so no further action has to be taken regarding the debt. However, if the spouse keeping the home is not on the mortgage or it is jointly held in both parties’ names, then that spouse may have to refinance the mortgage into their sole name. Depending on your financial circumstances, this may or may not be feasible.
Sometimes it can be negotiated that a certain amount of time is allowed to refinance, but your spouse may not be able, or willing, to stay connected to the mortgage for the time period necessary for that to happen as it is often difficult for the relocating spouse to purchase a home while he or her name is still associated with the debt related to the former marital residence. The other consideration you should make is that the equity, or value, of the home may have to be divided between both parties. This is a broader issue that has to be considered with the entire marital estate, as there may be other assets or debts to offset the value Before this issue is addressed, it is typical to obtain an appraisal of the home’s fair market value so that both spouses can make an educated decision.
Sell the Home
Your second option is to sell the home and distribute any proceeds from the sale as you and your spouse agree. Letting go of the home often comes with varying emotions, especially if that’s where your kids have grown up. As a parent, you can make it an adventure and a positive change for your kids. From a more selfish standpoint, this is your chance for a fresh, new start. Aside from the emotional investment, the practical approach is to consider whether selling your home is a smart financial decision. Depending on the time of the year, the economy, improvements that need to be made, and other factors, it may make better financial sense for everyone involved for the sale to be delayed, or for one spouse to keep the home. This may require you and your spouse to work together to come up with a solution that works well for both of you, and your children.
Legally Separated – Best to Work Together
Attempting to resolve these issues together gives you more control and often allows for more planning. If a judge decides what happens to the marital home, neither spouse may be satisfied with the result. Coming to an agreement allows both parties to weigh in on what happens to the home, who assumes the mortgage and when, what the value is, and who is entitled to what portion of the proceeds in the event of a sale. An experienced family law attorney can help guide you through your options and may assist you in coming up with a solution you may not yet have considered. Home is where the heart is…so follow yours.