The marital home where couples live together is often their biggest shared asset. Couples often spend thousands on a down payment and earmark a significant portion of their monthly income to cover mortgage payments.
Each spouse theoretically has an interest in the marital home and the equity accrued in the property when spouses divorce. However, deciding how to address that equity can be more challenging than people initially anticipate. Couples frequently end up fighting over real estate during their divorces, and their disputes may relate to several different considerations.
What factors often trigger conflict between spouses who own homes together when they divorce?
1. Concerns about possession
The first dispute related to the marital home may arise as soon as one spouse files. Most people don’t want to continue living together during divorce. However, people are often anxious about leaving the marital home because they worry they may never be able to regain possession if they leave.
Spouses need to consider factors including custody arrangements, maintenance obligations and pre-existing connections to the property when determining who stays and who moves out during the divorce. It is sometimes feasible for the person who leaves the home to regain possession at the end of the divorce process.
2. Disagreements about fair market value
Spouses can sometimes have vastly different ideas of what the home is worth. One spouse may point to the purchase price of the property, while the other may look at the current market in the neighborhood if similar homes currently sell for a much higher price.
It can be difficult for spouses to agree on what the home is worth for the purposes of property division as they divorce. It is sometimes necessary to work with a real estate agent or appraiser to settle those disagreements.
3. Challenges related to sharing equity
Some couples have enjoyed a comfortable standard of living throughout their marriages and may have little issue locating other assets that can effectively offset one spouse’s share of equity during the divorce. Other couples may not have retirement accounts, small businesses or other high-value assets to balance out home equity during divorce negotiations.
It might be necessary for one spouse to refinance the mortgage and withdraw equity to compensate the other. Doing so is a straightforward solution to a common source of dispute.
However, it is also a move that increases the monthly mortgage payments substantially. The spouse hoping to retain the property after the divorce may need to understand how withdrawing equity might affect their eligibility for a mortgage and their monthly budget.
People preparing for divorces involving high-value marital assets often need help. Learning about the law and establishing long-term goals during and after divorce can help people secure favorable outcomes.
