Dividing real estate, and property in general, is often a major issue in a divorce. Real estate refers to land, houses, and/or buildings that you own, as opposed to personal property, which is belongings such as your furniture and clothing. If there is anything of value at issue in a divorce, it is often real estate, which, for many people, is simply the house that you and your spouse lived in together.
You and your spouse may be able to agree how to divide your house particularly if it is worth little. In other words, if your mortgage balances on the house are equal to or exceed the value of the house, which isn’t uncommon in today’s housing market, then the house is actually a debt rather than property of any value. Of course, the issue can become much more difficult if you made a substantial down payment on the house when you bought it, or if you have owned the house long enough to build up some equity, or value, in the house. The house is worth its fair market value, or how much you could sell it for today, less any debt secured by the house, such as a mortgage, a home equity loan, or an equity line of credit. If you can’t agree on a value for the house, you should contact a local realtor or appraiser to help determine its value.
Once you have determined the value of the house, you then need to decide how to divide it between you and your spouse. There are many different ways that you can divide real estate. For instance, if your house isn’t really worth anything due to the debt secured by the property, the house might go to whichever of you is willing to assume the debt. If neither one of you are able or willing to keep the house and assume the debt, then another option is to sell the house and divide any proceeds, after all debts are paid, between the parties. This is probably the best solution when neither one of you can afford to maintain the costs of the house on your own.
In many divorce cases involving children, it may be most logical for the custodial parent to stay in the house with the children, which means that you have to decide how the other spouse will receive his or her share of the house’s equity. For example, if you decide that you want to keep the house, you could refinance the house in order to pay your soon to be ex-spouse his or her share of the house’s equity.
If you still are unable to reach an agreement with your spouse about how to divide the real estate, or the amount of its value, it is common to allow your divorce judge to divide it, according to your state’s law. Rules for property division different from state to state, but most states adopt one of two main models of division: community property or equitable distribution. A few states use the community property model, which divides property that both spouses own equally between them, and awards separate property to the spouse who owns it. Most states use the equitable distribution model, which has a goal of dividing property fairly – but not always equally – between the parties.
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