Can we keep the house jointly after divorce?
Real estate is – sometimes – complicated. I started practicing law actively after the big crash in 2008, but I have been told by several other practitioners who were working at the time that property values meant that people who would otherwise have gotten divorced stayed together. When houses plummeted in value, it meant that people could no longer afford to get out of their homes, let alone find two new places for them to live afterwards. Lots of people purchased homes at what turned out to be the top of the market, only to find out that, overnight, their values dropped dramatically.
For awhile (though, thankfully, this trend seems to be ending) we saw a ton of houses that were underwater. Usually, in those cases, one party or the other agreed to keep the house. There was no buying out of equity, though (because there was no equity), so that person just…took the house. In the case of a house that is underwater, it’s not an asset – it’s a liability. But what was the alternative? To sell a house that is underwater, you have to bring money to close! For some people, that just wasn’t a possibility. So, either, one party took the house (hoping that, eventually, they’d dig themselves out of the hole) or people stayed together because they couldn’t afford the alternative.
Still, real estate can be a tricky issue. In a divorce, real estate is often one of the highest dollar assets, so we do devote a fair amount of attention to it. In many cases, despite the fact that there’s a lot of value there, it’s simple – one party or the other buys out the other, or the house is sold and the proceeds split in some way.
But those aren’t your only choices, even if they are the most popular choices. Lots of people, for whatever reason, choose to do something different. Whether the market isn’t that strong, they prefer to rent out the home, or maybe want to try a nesting arrangement in the home (where the parties move in and out of the home to have parenting time with the children, who live full time in the home), some people want to keep the home, rather than one party buying it or selling it and splitting the money from the sale.
Some people just want to stay in the home for a little while before they make a decision one way or the other – whether they do so just so that they can get their feet under them (or finalize the terms of the divorce, so they know how much child and spousal support they can expect to receive) or whether they sort of intend to continue to do so permanently, well, that’s their prerogative!
Can we keep the house in both our names?
Well, it’s tricky. And, I mean, technically, at some point, probably you and your husband both won’t live under the same roof. Most divorced people DO actually physically separate at some point, though it certainly takes some longer than others.
If the house is in both people’s names, eventually it may become a problem. The debt will be associated with both of your names, and that may make it more difficult to get a loan on a second house, if you plan to leave. Even if you don’t currently plan to leave, it’s a relevant consideration because you don’t want to decide to leave later and feel stuck because your financial situation would mean that it is borderline impossible for you to get another place to live.
Besides all that, you may find it distasteful to continue to have to deal with your husband after the divorce — especially if he ever has any issues paying his debts. If you’re jointly liable on this mortgage, him not paying his portion of the expenses leaves YOU on the hook. If you have a tenant, you’ll have to cooperate with him to manage repairs and to handle things (including potentially covering additional expenses) in between tenants. Remember to consider that there could be good times and bad times!
So, anyway, to continue to try to answer this question… You should also know that there are essentially two ways to get divorced in Virginia – in court, or by agreement. In court, you’ll find that the range of possibilities are considerably less varied than what you and your soon to be ex would be able to agree to. A judge almost certainly would NOT order that you keep the house in your names. He also can’t order that one of you HAS to buy out the other. Probably, if a judge gets ahold of a case with issues like this, he will ultimately have to order that the house be sold or the proceeds split.
You could, though, agree to keep the house in your joint names. You can agree to do almost anything, so long as it’s not illegal. And, if that’s what you want, well, there are ways to do it.
When you buy a house as a married couple, you buy it as tenants by the entirety. That’s a status that can only exist for a husband and wife. Once you’re divorced, you can no longer hold your property as tenants by the entirety. Once you’re divorced, you’re legal strangers – it doesn’t matter that you used to be husband and wife.
To really do the thing properly, you’ll need to execute a new deed titling the house with you listed as joint tenants with the right of survivorship. It protects your interest in the home in case something terrible happens – like he dies – before the house can be otherwise disposed of. Once you change it that way, to reflect your new legal status, you can technically keep the house titled between the two of you for as long as you like. It complicates some things – taxes, for one – but it’s nothing that you can’t work out with a CPA or other financial adviser.
For more information, or to schedule a one on one consultation with one of our attorneys, give our office a call at 757-425-5200.