A house is often the most valuable asset a couple owns. The moment you and your partner decide to part ways, the shared dream of homeownership can quickly turn into a nightmare.
What should you do with this important piece of real estate in light of a divorce or separation? Here are some different scenarios to consider.
You own a house together but want to break up
In divorce, the house that once symbolized unity and happiness becomes a joint asset that must be dealt with. This process is a legal matter, and this division of property is definitely not as simple as splitting a bank account or a set of furniture between the two of you. You must think about logistics, property rights, mortgages, and a host of other things.
Complicating your already stressful divorce process is the fact that homes often carry emotional weight. Your home may hold memories and sentimental value for you, making any decisions about its fate even harder.
Several variables affect your next course of action. These can include whether you're married or cohabitating if there are children involved, who contributed to the house financially, and many more.
If you’re not married
When it comes to home ownership and break-ups, the rules about dividing property differ substantially for those who aren't married. Let's dig into this a bit more.
Single ownership
If one person solely owns the home, the situation is relatively straightforward. Regardless of how long you've lived together or how much the non-owner contributed to the household, the property legally belongs to the person whose name is on the deed. The non-owner has no automatic legal rights to the house.
However, if the non-owner can demonstrate that they contributed financially (say, toward the mortgage or major renovations) with the understanding that they would share in the home's value, they may be able to make a claim.
Joint ownership
Things get more complex when both parties own the house. In this case, it's essential to understand what type of joint ownership you have: joint tenants or tenants in common.
Joint tenants have equal rights to the entire property. This means if you decide to sell, the profits are to be divided equally regardless of who contributed what.
Tenants in common may own different proportions of the property. For instance, you may own 60% while your partner owns 40%. If you were to sell, the profits would be distributed according to these percentages.
Options to consider
One person could buy out the other's share, especially if one party is more attached to the home or better equipped financially to handle the mortgage. Or, you could get a real estate agent (preferably one with experience working with divorcing couples), sell the property, and split the proceeds according to your ownership stakes. Another option is to continue owning the property together. If rental income could be generated from it, this may be a particularly attractive plan.
To see and use Hello Divorce’s free Home Equity Buyout Calculator, click here.
If you are married
For divorcing spouses, navigating property division has a layer of complexity beyond the unmarried separation process. The way your shared home is handled largely depends on the laws of your state.
Community property vs. equitable distribution
In the U.S., states follow either a community property rule or an equitable distribution rule when it comes to dividing marital assets in a divorce.
- In community property states, all income earned and property acquired during the marriage is considered community property, owned equally by both spouses. This includes your house if it was bought during your marriage.
- In equitable distribution states, assets are divided fairly but not necessarily equally. Among other things, the court considers factors such as the length of the marriage, each spouse’s economic circumstances, and their contributions to the marriage, including homemaking and child care.
What this means for your house
If you're in a community property state and the house was purchased during the marriage, it will typically be split 50/50 between you and your ex-spouse. But if you’re in an equitable distribution state, the division isn't so straightforward. The court will consider multiple factors to determine a fair division.
Options to consider
Like unmarried couples, you have options. One spouse could buy out the other's interest. You could sell the home and divide the proceeds. Or, you could continue your joint ownership. The latter option is a common scenario for divorcing parents who don’t want to disrupt the school and social lives of their children.
If you’re married but separating
First, let’s talk about what “separating” could mean. It might be an informal arrangement you make with your spouse, a legal separation you solidify with the court, or a trial separation that only lasts a specific length of time.
Each type of separation has different implications for homeownership and the division of assets.
Legal separation
Legal separation is a court-recognized separation available in some states. Legally separated couples are still technically married, but they live apart, and they divide assets and responsibilities as if they were divorced. Some couples choose this route for religious reasons, health insurance concerns, or as a precursor to divorce.
In a legal separation, if the couple cannot agree on how to divide things, the court will distribute property much like in a divorce, including the house. The person who gets the house may also take on the mortgage.
Trial separation
A trial separation typically involves an informal agreement to live apart for a while. The goal is to decide whether divorce is the right path. It's a testing ground, and no legal agreements are drawn up.
However, decisions made during this time could impact future settlements if you do divorce. For example, if one person stays in the house during separation and pays the mortgage, they may argue that they're entitled to a larger share of the home's value later.
Homeownership responsibilities
Regardless of your separation type, the two of you must determine who will pay for what. This includes the mortgage, property taxes, insurance, and maintenance costs. These decisions should be made in writing, even during a trial separation, to avoid disputes down the line.
Need help understanding your home-related options?
Download Divorce & Your Home, our free three-step home solution with tips and worksheets to help you understand and make the most of your home's equity.
FAQ about home ownership during a break-up
Can I force my spouse to move out of the house during separation?
Unless there's a court order due to domestic violence or other serious issues, you cannot forcibly remove your spouse from the home. It's usually best to negotiate living arrangements amicably or seek legal advice if an agreement can't be reached.
What happens to the house if one spouse dies during divorce proceedings?
In most cases, the surviving spouse becomes the sole owner of the house, regardless of the divorce proceedings. However, this largely depends on how the house was owned (joint tenants vs. tenants in common) and the laws of your state.
How is equity divided in a divorce?
Equity, the value of your house minus any outstanding mortgage or loans secured by the house, is typically split between former spouses according to the type of property division rules and divorce laws followed in your state (community property or equitable distribution). If you're considering buying out your spouse's share, Hello Divorce offers a handy Equity Buyout Calculator to help you understand the financial implications.
If you’re divorcing or separating and need help reaching a settlement agreement, mediation is one possible solution. There are others as well, and Hello Divorce can help you think this through. We don’t just offer online divorce plans; we offer a menu of a la carte legal services related to divorce that you can pick and choose from. Have questions? You are welcome to schedule a free 15-minute call with us to learn more about the expertise we offer.
