How courts divide equity in a marital home when purchased by one spouse?

October 25, 2021 - Categories: Legal Articles

No one plans to get divorced. Unfortunately, divorce is a fact of life, and there’s always a chance you might face this situation. Since the family home is often the largest asset in any marriage, it’s often the one that people worry about the most. Fortunately, there are some rules about how courts divide the equity in a home during a divorce. 

How Are You Married?

Most people get married in a “community of property.” Which means that all of your assets and debts are pooled, and both spouses have an equal share of both. 

However, there are some cases where people are married with a prenuptial agreement, or, in rarer cases, you might sign a postnuptial agreement after you are already married. These agreements serve to exclude assets from the marriage. So, your prenuptial agreement might state that each spouse keeps the assets that they brought into the marriage or set out various other rules and stipulations. 

If you do not have a prenuptial agreement, even if you bought your home on your own, it will still be treated as a joint marital asset.

Valuing the Home

If you were married without a prenup, the first step the court will take when dividing property like your home is to value it. This can be done in several ways. Sometimes, the spouses agree on the value of the home. The home might also be independently valued by a third party. However, this is done, it will put a number value on the home, and since you are each entitled to 50% of the value, it provides a starting point. 

Dividing the Asset
When there’s a home involved in a divorce where there is no prenup setting out how it will be handled in a divorce, the next step is to start negotiating. Lawyers for each spouse will review facts like who put more money into the purchase of the home, whether one spouse or the other paid for renovations or maintenance and other factors. All of these will either raise or lower each spouse’s “stake” in the property. 

At the end of the negotiation process, each spouse should have a number for their portion of the value of the home. Provided everyone agrees, this will be used to determine the next step. Sometimes, this means selling the home and dividing the money from the sale based on those proportions. Other times, one spouse might take out a mortgage and buy the other spouse out. 

In most cases, you can expect some back-and-forth negotiation before an agreement about how to divide equity is reached. 

Although this is the general rule in most states, the specific laws of how this topic is dealt within in each state vary; therefore, we strongly recommend scheduling a free phone consultation with one our local in-network affordable attorneys for advice on how this topic applies to your given legal situation, in your particular state.

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