What Happens in a Divorce When the House Is Paid Off?

Property division is an important phase of a divorce proceeding. Parties may be able to agree upon a division, but often the court must get involved to ensure that the division is fair. If a married couple owned a home together, they must choose whether it should be sold, whether one spouse should be bought out or whether some other arrangement is workable.

In general, state laws permit a couple to mutually agree upon property division. The court can still review the agreement for fairness and, if the parties cannot agree or if the agreement is unfair, the court can dictate how property is divided. In community property states (Alaska, Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin), marital property is divided equally and each spouse keeps her separate property, according to Nolo, a legal information website. In all other states, assets accumulated during the marriage are divided “equitably;” equitably means fairly but not necessarily equally. The marital home can be a problematic asset to divide.

The biggest and most expensive asset most marriages have is a home, according to the website ExpertLaw. In community property states the marital home is a marital asset, and generally the court will divide the house equally among the spouses. This may require one spouse to buy out the other, especially if the spouse wants to stay in the home. In equitable distribution states, the courts may order a similar buyout but the payout may not be equal – the sum depends on factors such as how much each spouse contributed to the purchase price and the age and health of the parties.

In general, the marital home is either sold with the proceeds divided up, or one spouse is bought out by the other. The parties can tailor other arrangements. According to ExpertLaw, the parties could work in contingencies such as allowing one spouse to stay in the home until the children grow up and move out, at which point the house would be sold. ExpertLaw stresses the importance, when tailoring an agreement, of clarifying critical issues such as how the proceeds will be divided and who is responsible for paying taxes or making repairs.

Divorce can be an emotionally draining process; emotions may cloud your judgment with regard to what should be done with marital property such as the marital home. Because property division during a divorce depends on individual facts and circumstances, seek advice and counsel from an attorney before proceeding.