Dividing Home Equity in DivorceDividing the home equity in divorce can be handled many ways, depending on the circumstances of the individuals involved. The following questions and answer can help you understand the various options that exist.
Topic: How is the equity in the marital home split? Christy's Question: After we were married, we had a house built and have been living there for only 3 mo. The mortgage was taken out in his name only, but both of our names are on the deed. He put the majority of the money down, but after we moved in all bills were split 50/50. Would he automatically get this house since he put most down or would it be likely that it is split because of it was built after the marriage? Brette's Answer: What will happen with the house really is going to depend on what the rest of your finances look like. You'll each leave with assets that still exist, which you brought into the marriage. The marital assets will be split according to your state's law, which might say 50/50 or in an equitable (fair) way, depending on which state you are in. How the court will decide about the house is going to depend on what else you have to divide, what income was brought into the marriage and what funds your husband used for the down payment on the home. Even if he is given the house, you would be entitled to your portion (under your state's law) of the total marital assets. Talk to an attorney. » Return to top How are profits split if the house sells before the divorce is over? Jill's Question: My husband and I are going through a divorce and we decided to put the house up for sale. Our divorce will not be final until March 1st, and our house will go to closing Feb 11th. How do I request that the profits from the house be split 50/50 with the title company before we go to court? Do I have to have a written document? Brette's Answer: This has nothing to do with the title company. Your real estate attorney will receive the check for the proceeds. You can ask him or her to split it however you want in accordance with the divorce. Or you can put it in a joint account and have it divided as part of the divorce property division. Good luck. How do I get my equity share before the house sells? Lori's Question: My divorce isn't finalized yet, but my husband has decided to put our house on the market and said I have to wait until the house sells to get my part from it. It could take a year to sell; can I get my share first and then he sell it on his own? Brette's Answer: This is something you must agree to or convince the court to order. If there is enough marital property so that you could get cash or property now it is possible, but the problem is there is no way to know how much the house will sell for, so it is hard to calculate what half of that will be. Does a judge have to determine how the equity is split? Brooke's Question: My husband and I separated and are probably going to be divorced. We also own a home together. Can we simply agree on how the equity will be split, or are the legal laws giving us both rights to a certain amount of equity? Brette's Answer: You can agree to anything as long as the court agrees it is fair. Good luck. » Return to top Should I let him buy me out of the equity and and call it even? Rhonda's Question: I have 3 children ages 16, 14, and 13. We have been married for 16 years and my husband and I own 2 homes where we have a total equity of about $104,000. My oldest son wants to live with dad, my daughter wants to live with mom, and my youngest son wants equal time in both households. Would I be selling myself short by having him buy me out of the two houses and and calling it even? Brette's Answer: You should not agree to anything until you talk to an attorney and discuss all your options. There are likely other assets and debts of the marriage that you need to consider, as well as alimony. If I keep the house, how do I buy out his equity? Janice's Question: My husband and I are getting a divorce and I want to keep the house. The equity in the house is 60,000. If I want to keep it and buy him out, do I give him 30,000? Is that how it works? Brette's Answer: You could give him $30k in cash, other assets or have him take on $30k in marital debt in exchange. Is the equity decreased by closing costs if he buys out my portion? Laura's Question: My husband has stated he would like to buy me out of our marital home by paying me 1/2 of the equity. He is a realtor and is stating that the equity will be decreased based on closing costs and other taxes that might apply if we sold it. Is that true? Can the house value or equity be decreased based on "selling" taxes or closing costs? Brette's Answer: All of this is negotiable and there's no wrong way or right way. If a court ordered him to buy you out, it is likely you would not have these costs deducted if he is remaining in the home. » Return to top Should I let him buy out my equity if the house isn't selling? Claudia's Question: My husband and I separated 8 months ago and he moved out of the marital home. The home has been on the market, but with no interested buyers. I just found out that he has not paid the mortgage in two months and we are facing foreclosure. He wants to refinance and buy me out so that I have money to buy another home. How does this work, and would it be a wise thing to do? Brette's Answer: You need to consult an attorney who can advise you what are the best steps to take in your situation. Getting your cash out of the house now is likely a good opportunity for you, so you should pursue this. Is he obligated to accept my offer this long after the divorce? Sara's Question: I divorced 3 yrs ago & am now in the financial position to buy my ex out of the family home (which I live in with the kids). I am offering him 50% of the equity, is he legally obliged to accept this offer? Brette's Answer: No, not unless your decree says so. Am I entitled to any equity from his Mom's house? Bridgette's Question: I moved in with my husband to the top floor of his mother's house, which she bought before we were married. After we moved in I gave my husband a check each month to help pay what I thought was the mortgage, but now my husband has informed me that I was paying rent. The mortgage was in my husband's and his brother's names, and the deed was always in his Mom's name. Seven years ago she refinanced the mortgage so that the mortgage and deed are now only in her name. Am I entitled to any equity in this house? Brette's Answer: From what you've said, it sounds as though your husband was never an owner, therefore he does not own any equity and there is none for you to ask for in the divorce. » Return to top How does co-signing a loan affect property rights in divorce? Stephanie's Question: In the state of Florida, a son co-signs for his dad on a mortgage. The son will sign the mortgage as a non-occupying married person and that his wife has no interest in the property. The son is now getting a divorce. Can a judge side with the "wife" and allow her to have interest in the Dad's Home? Brette's Answer: You need to consult a FL attorney about this, but in this kind of situation essentially the son is accepting responsibility for the debt without becoming an owner of the property. Therefore there's nothing for the wife to get. Now, if the son is listed on the deed, that is another matter. The deed is what gives ownership in the property. Would I get any equity from the house he had before we got married? Annie's Question: I was married about 4 years ago and now my husband wants a divorce. We live in the house that he purchased prior to our marriage and he is paying for the mortgage. As part of a divorce settlement will be be entitled to any portion of the house value? Brette's Answer: This is a question I am asked frequently. If you contributed to the upkeep or improvement of the home, or if marital funds were used to pay the mortgage, then yes, you would be entitled to a portion of the equity. » Return to top Would I get any equity if I helped remodel his house? Loleta's Question: My husband owned his home before we got married, but we put in many permanent improvements during our marriage. All remodeling was paid out of marital assets. In divorce I have to leave his home with all the improvements behind. He claims they are all his now. What is your suggestion in regaining compensation? Brette's Answer: The increase in equity would be a marital asset, and you can ask that it be divided in the divorce. Am I entitled to any equity if we were never married? Lydia's Question: I am not married, but we have a house (in both of our names) and a child together. I have paid 50% of the mortgage since the beginning. Am I able to receive 1/2 the equity in this situation, even though we weren't married? Brette's Answer: Yes, you would be entitled to half of it. Good luck. How much equity is he entitled to if it's my house? Susan's Question: I bought my home in 1989 when I was single. I married about 2 years ago and now want a divorce. Is he entitled to 1/2 of the equity in the home now? Also, can he make me sell? Brette's Answer: No, but he may be entitled to a portion of the equity that accumulated during marriage. If he contributed to the value of the home - making mortgage payments, painting, retiling the bathroom, or even just mowing the lawn, it is possible he could be entitled to something. Even though he may be entitled to a portion of the equity in the home, but that doesn't mean you have to sell the house. If he's entitled to $4000, then that $4000 could come out of marital savings or other marital property. You should talk to an attorney. » Return to top How is equity split after a long-term separation? Linda's Question: My spouse abandoned the house over 10 years ago and I have been making the payments. Would he get half the value of what the house was worth 10 years ago or what the value of the house is today? Brette's Answer: You should consult with an attorney who can review you entire financial situation. Generally, property is divided as of the value at the date of separation. Can I get any equity if he remodels a house before the divorce is final? Lisa's Question: I am hoping to buy a new house for me and my children when my husband buys me out. Can I sign a contract for a house before the divorce is final or would it be considered marital property? My second question is...my husband owns 2 other houses that he is planning on remodeling soon. If he has this work done while we are still married, am I entitled to the equity of those houses too? Brette's Answer: First off, you need an attorney. Secondly, property is usually divided as of the date of separation - a purchase you make before the decree is usually not a problem, unless you use funds that are not decided to be yours. If your husband has not remodeled the homes yet and there is no increase in equity, the property is divided as of value at the date of separation. Improvements made after this date with funds determined to be his are not something that would be divided in the divorce. You do need to talk to an attorney though simply because of the amount of property involved. If the property he owns increased in value during the marriage you may be entitled to a portion of that increase in equity. » Return to top Topic: Is the equity split evenly when the home eventually sells? Ellen's Question: I have been divorced for 5 1/2 years and am still living in the marital home with my children. I have been paying the mortgage on the house and the taxes on my own for the last 5 years. When I sell the house does it get split 50/50 even though he has not contributed toward the mortgage or upkeep. I know its half his house, but it doesn't seem fair if he gets half when I have been the one paying the mortgage and real estate taxes. Brette's Answer: No, the past few years' equity would be yours. When you sell it, you would simply divide the proceeds so that you are paid for that portion of it. You should consult your attorney to be certain how the state your divorce was in would handle it. » Return to top Is the equity split evenly if the home sells many years later? Lori's Question: In our settlement agreement, we agreed to split the equity evenly when our home sold. Since the divorce, I have paid the mortgage alone for 10 years. Can I modify the agreement or do I still have to split the equity 50/50? Brette's Answer: It sounds as if your ex would be entitled to the half the equity of the property at the date of divorce. Most likely, the property has appreciated since then and is worth more. Another way to approach this is to take the equity of the home today, less the amounts you put into the property and split that. An attorney can advise you about how best to handle this. Topic: House and equity in place of child support Vivien's Question: The mortgage is in my husband's name, and both of our names are on the deed. He has agreed to give me the house and the equity in exchange of child support because he can't afford to move on with his income (and I make more money). This will allow me to sell the home and buy my mothers home, and secure a better home for the kids. How can this be done? Brette's Answer: You should talk to an attorney who can help you decide which option makes the most sense. You can both sell the house and then have the proceeds go to you. Or he can quit claim the deed to you and you can refinance the mortgage into your own name and then sell it. If you're doing this in exchange for child support, it's very important that you have an attorney help you draw up a settlement that will pass the court's scrutiny - you're opting out of child support and this has to be done carefully. You also need to make sure that the proceeds of the house are part of the property settlement and not considered alimony. » Return to top What are my options if my Dad gave me his equity in the house? Colleen's Question: My father gave my mother the family home and gave me his equity to help pay for my education. Now I'm confused. What exactly was given to me? How do I find out how much equity he has? When can I use the equity? Is the equity a loan I must pay if I use for my education? Brette's Answer: Have you talked to your mother about this? Since you are now co-owners of the home, you should. From what you've said, your dad has transferred his interest in the home to you. You can turn this into cash by having your mother buy you out, selling the home and splitting the profits with your mom, or taking out a home equity loan. » Return to top Topic: Deferring equity share until house is refinanced Bev's Question: I have filed for an uncontested divorce, and want to make things as fair as possible. I feel that it would strain his budget if he refinanced our home right now, so I offered to continue paying $200 towards the principal for 4 years so that it would being down the mortgage. At that time, he could refinance the loan and pay me my share of the equity at that point. He doesn't think that this is a good idea. What do you think? Brette's Answer: I think it would be very foolish of you to offer to do something like this before talking to an attorney who can explain your rights and the various ways property settlements can be arranged. Get some advice before doing anything. » Return to top Topic: What if he refuses to split the equity in the house? Pat's Question: I am going through a divorce, but he will not agree to anything, so this will be going to trial. Meanwhile, I paid the high mortgage for a year until it was sold. He will not agree to split the equity so it is held in escrow . This has become a very ugly divorce and I have tried to give more than my fair share to get this over with. This has been going on for over a year and a half, and I getting tired and stressed. My legal fees are increasing with each court appearance, and it's hard to pay because the money is being held in escrow! Brette's Answer: I hope you have a good attorney - if not you might want to consider finding someone else. You're certainly entitled to a portion of the proceeds of the home and the fact that you paid the mortgage for a year should impact your award. Ask about seeking for him to pay your legal fees. Unfortunately, the courts move slowly, so your case will get through the system eventually. » Return to top What happens if he doesn't pay me the equity in the house? Pat's Question: My divorced was finalized June 17th. I was awarded the equity from the home in the final judgment. He has until Sept 17th to give me the money. If he doesn't pay me the equity, what procedures do I take to get my money? Brette's Answer: Check with your court clerk. You will need to file a violation or enforcement action. Am I liable for taxes when he pays me the equity share? Debbie's Question: I signed a quit claim deed and the divorce decree states this he is to pay my share of the equity in the home. I have a check for the amount of the equity he owes. Am I liable for taxes on this? Brette's Answer: Property distributions in a divorce judgment are not taxable income. You should consult with your attorney though to be certain it is characterized as property settlement and not as a lump sum alimony payment. That would be taxable income. How can I get my fair share after the divorce has been finalized? Heidi's Question: I signed papers giving my husband the house. Now that he moved his girlfriend and her 4 kids into the house, I want my fair share. Is there anything I can do after the divorce is final? Brette's Answer: You can't modify the terms of the property settlement just because you changed your mind. There needs to some change in circumstance.
Related Articles: Brette Sember is a former family and matrimonial attorney and mediator, nationally recognized expert, and author of many books including The Divorce Organizer & Planner, No-Fight Divorce, and How To Parent With Your Ex. This column provides general information about the various aspects of divorce. It is not intended to take the place of legal counsel and should not be considered personal legal advice. For specific recommendations concerning your situation, please retain experienced legal counsel. WomansDivorce.com and Brette Sember disclaim any liability from any claim arising from any information contained in this column. This column is not a substitute for legal advice. Divorce Process / Children and Divorce/ Emotions and Divorce Home / Divorce Guide / State Resources / Divorce FAQS
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