How is a House Divided in a Divorce?
The following factors are taken into account before dividing a house in a divorce:
- Does the pre-nuptial agreement specify how the house will be divided?
- Is the house a separate property?
- What are the state laws (community property distribution or equitable property distribution)?
- Have the spouses agreed on how to divide the house?
Does the Pre-Nuptial Agreement Specify How the House Will Be Divided?
If the prenuptial agreement states that a spouse has the right to the house in the event of a divorce, separation, death, or any other event, then the house goes to the beneficiary spouse when the specified event occurs.
A prenuptial agreement can take precedence over the state’s marital property distribution rules.
Is the House a Separate Property?
If the house is classified as separate property that belongs to a particular spouse, then that spouse gets the house – it is not divided. Separate property is a property that belonged to a spouse before marriage, was gifted to him/her or inherited by him/her during the marriage, or was purchased during the marriage using separate property funds, and was kept separate throughout the marriage (i.e., it was not comingled with the community marital assets).
So long the asset was kept as separate property during the marriage, it goes to the spouse who owns it in his/her name.
What are the State Laws (Community Property Distribution or Equitable Property Distribution)?
Community Property Distribution
In community property distribution, the courts first itemize the assets into two categories: community property (assets accumulated together during the marriage by either spouse or in joint names) and separate marital property (as explained in the section above). In most cases, the community marital property is divided on a 50/50 basis. So, if a house is classified as community property, it is likely to be distributed on a 50/50 basis. Note that only 9 states follow the community property distribution rule.
Equitable Property Distribution
Courts in states that follow the equitable property distribution rule are likely to distribute the house on a fair and equitable basis between the spouses. Equitable distribution may not necessarily be on a 50/50 basis, though in practice 50/50 distribution is followed in most cases.
To determine the property distribution ratio between the spouses, the courts consider how much money each spouse contributed towards the house, whether it is equitable to give a majority share of the house to the spouse who has invested a larger or the entire sum, the income-generating capacity of each spouse, the age and health of the spouses, their education level, duration of the marriage, the intangible (non-monetary) contribution of each spouse to the marriage, and other factors that depend on the circumstances of the case.
However, while the courts can dig deeper, they usually do not. Instead, they may opt to ignore the details of the couple’s finances, and choose to split the house on a 50/50 basis, especially in marriages that lasted long.
Courts in equitable property distribution states consider how long the marriage lasted. If the marriage lasted for a short while, perhaps for less than 1 or 2 years, then the courts are likely to take the following considerations into account before dividing the house:
- Individual monetary investment of each spouse in the house
- Age, health, education, current income, and earning capacity of each spouse
- Intangible contributions of each spouse toward the marriage
That said, in general practice, however, even for short-term marriages 50/50 division is common. However, in some ultra-short-term marriages (marriages that last less than a year), the courts may reverse the clock and place the spouses back into the financial position they were in before the marriage – in other words, each spouse can get the asset that he/she owned at the beginning of the marriage.
Have the Spouses Agreed on How to Divide the House?
If both the spouses (in any U.S. state) agree to sell or divide the house, they should submit their plan to the courts and get their approval. The mediation process helps spouses reach such an agreement. Courts usually accept such agreements – however, if the house is not covered by the marital agreement, the courts decide on its distribution based on state laws.
Schedule a time to talk with us – we are here to help you. When you meet with your divorce lawyer, we will go over your entire case, your children, your money and everything else that’s important to you. Our goal is to remove the fear associated with divorce by protecting your money and maximizing your time with your kids, all within 3-6 months. We look forward to meeting with you!