Frequently in a divorce, the spouses heavily rely on getting the equity out of the marital residence. Whether they want to keep the house themselves or are hoping to use the proceeds for their next home, this will be a major consideration throughout their case. Sometimes, the marital home might be the only asset the parties have that is worth fighting over. It becomes very important, then, to determine what a fair value of the home is so that we are able to negotiate a settlement.

Before getting started on anything else, it’s important to determine the ownership interest each spouse has in the property. The easiest case is when the home was purchased solely by the spouses after they got married. In that case, each spouse has an equal interest in the equity of the property.

What happens if only one spouse is listed on the deed or the mortgage? Don’t panic. As long as the house was purchased during the parties’ marriage and before they separated, the house is still considered marital property, and each spouse has an equal interest in all of the house’s equity.

Where things become complicated is when one of the spouses purchased the home prior to marriage and the deed was not updated to include both spouses. For those cases, the spouse absent from the deed does not have an equal interest in the entire home. Instead, the marital equity in the home is limited to its increase in value during the parties’ marriage.

Most times, this happens when a spouse purchased the home well before they were considering marriage. Maybe they acquired it from a previous divorce, or maybe they bought it before they met their current spouse. Note that if the deed is later updated to include both spouses, the ownership interest is no longer limited, and both parties have an equal interest in the entire house.

If you are going to meet with an attorney to discuss the marital residence, it’s best to have the following information if it’s available:

1.        The date the property was purchased.

2.        Who is named on the deed?

3.        Who is named on the mortgage?

4.        The current principal balance of the mortgage.

When discussing the equity in the house, we first have to consider the fair market value of the home. If the parties want to sell the house, this value will be set by the final selling price.

If one spouse wishes to retain the marital residence, they will have to buy out the other individual’s interest. In these cases, it’s best to have a formal appraisal to protect both parties. For the seller, this ensures they are getting the most out of the house. For the buyer, this ensures they are not overpaying to keep the house. Some clients like to rely on things like Zillow or other websites because they’re free. But those values may be inaccurate and do not consider upgrades that were made to the residence. In most instances, it’s well worth the money spent to have an appraisal.

In either case, the house will have a huge impact on negotiating throughout the divorce. If you or someone you know is considering a divorce or needs assistance with a pending divorce, our attorneys would be happy to discuss their options.

Call us at (717) 358-0600 to schedule your consultation.