The house in Virginia divorce
For many married couples, the home is one of the biggest (if not the biggest) asset. You’re going to have to do some thinking about what you want done with the home after divorce. For a lot of reasons, the home comes with a lot of emotional attachment, and different people have different ideas about what they’d like to see done with it.
For many moms, keeping the home is important. There are the memories to consider, of course, but also a sense of continuity for the kids, as well as the importance of making sure they stay in the same school system. For other women, though, the house is too full of memories; memories they’d like to get away from as soon as possible.
Of course, there are practical considerations, too. You won’t be able to keep the home, regardless of whether you’d like to, if you can’t qualify to refinance the remainder of the loan into your name (plus your husband’s share of the equity; you’ll have to buy out his interest). If the mortgage payments will be too much for you, it would be a bad idea to try to stay in the home.
You’ll want to do some thinking about what you’d like to see done with the home. Better yet, if you and your husband can reach an agreement before you even talk to a lawyer, that’s one less thing to decide in negotiations. Really, though, you only have a couple of options:
What happens with the house in Virginia divorce?
1. Buy the house yourself.
If you want the home, that’s fine. (Unless, of course, he wants the home, too, and then we may have to negotiate.) Lots of people want to keep their homes. But you’ll want to talk to a mortgage broker and get some information about what that would actually look like. What would your mortgage payment be? Can you qualify for the mortgage on your own? At this point, you might also want to talk to your attorney about what child and spousal support you might be entitled to receive, because you can bet that your mortgage broker will want to know those details, too. (In fact, in many cases, you may have to receive child or spousal support for a certain period of time before you can qualify for the mortgage. Ask your broker about the details.)
You’ll have to qualify for the outstanding loan balance, plus your husband’s share of the equity. (He will want to receive his portion pretty quickly, especially since he’s going to have to find somewhere new to live, too.)
If you can’t qualify for the outstanding loan balance and your husband’s share of the equity, you might want to see whether it’ll be possible to negotiate something else. Maybe he will be willing to forego his share of the equity if you forego a similar portion of his retirement account. Say, for example, that there’s $50,000 in equity in the home, so $25,000 is his share. You don’t want to have to qualify for an additional $25,000 loan (or maybe you wouldn’t qualify for it at all with the additional $25,000 rolled in there), so you could give up $25,000 out of his 401(k). The larger his share of the equity, the larger the value of some other asset you’d have to give up in order to get him to agree. It doesn’t necessarily have to be a perfect exchange of value for value, but you are definitely much more likely to be successful if that’s what you offer. Ultimately, though, it’s up to you and your husband (and your attorneys) and what you’ll be able to negotiate.
2. Sell the house to your husband.
If your husband wants to keep the house, that’s fine, too. One of the advantages of selling your interest to your soon to be ex spouse is that you don’t have to wait for a qualified prospective buyer; you can sell the house much more quickly (just the time it’d take to refinance the home) without waiting for a buyer to fall in love with the house.
Depending on the time of year and the condition of your house, it could take awhile to find the right buyer. That means that you can get your share of the house out of it more quickly, which can translate to you having the ability to put your share into your new home. Good, right?
You have the same ability to offer something else up in exchange for giving up your interest in the equity of the home. Maybe you want him to leave your retirement account alone in exchange for your share of the interest in the home. That’s your prerogative, so feel free to be as creative as possible.
3. Sell the house.
Maybe you both need to be out of the home. For whatever reason, whether you choose to leave or whether you can’t afford to stay, it may be necessary to sell the home and split the proceeds. If the home is a marital asset (meaning it was purchased and paid for during the marriage using only marital funds), an equal 50/50 split is probably what you’ll see.
If the house is a hybrid asset (part marital, part separate), a different distribution might be necessary. Say, for example, that you sold a condo that you bought prior to the marriage, and you put the money from that condo into the new home. When you sell the home, you’ll be able to trace your separate contribution to the home, and get that back in the divorce. Just because you put it into the marital home doesn’t mean that it all becomes marital; you can still get your portion back. In a case like this, you might receive greater than 50%. (The same principle applies if it’s his separate interest.)
Who pays the expenses in the meantime?
The issue of how to handle the expenses with the home (the mortgage, utilities, taxes, whatever) before you reach an agreement or while the sale is pending is a pretty big one.
Technically, before you have an agreement signed, no one is obligated to pay the bills—at least, not legally. If you don’t pay your bills, you may have other issues (like if, for example, then your home goes into foreclosure, or if your credit score declines and you can’t qualify for another rental or home purchase), but legally there’s no way to FORCE either of you to pay the bills. Usually, when my clients have issues like this, I recommend that they continue to pay the bills the way they did prior to the separation.
Once there’s a separation agreement in place, you’ll have to follow what it says regarding how expenses will be shared between then and when the home is sold. Sometimes, that means you’ll share expenses 50/50; other times, it means that one party will move out and the other will pay the expenses until the home sells. It’s pretty flexible, and it’s totally up to you guys to negotiate.
For more information, or to schedule a consultation with one of our licensed and experienced Virginia divorce and custody attorneys, give our office a call at (757) 425-5200.