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Michigan Family Law Blog

Friday, October 7, 2016

Keeping the Home in Michigan Divorce Cases

I am a family law attorney with my office in Auburn Hills on the border of Rochester Hills, Michigan.  The marital home can be one of the bigger assets in a divorce case.  There are several ways to handle the division of the value or the equity in the marital home.  The most straight forward way is to sell the home and divide the proceeds.  The other common way of dividing the equity is that one party will keep the home and "buy-out" the other spouse's equity.  Typically the equity is determined by obtaining an appraisal and then subtracting the balance of the mortgage.

In most cases, the spouse keeping the home will not receive a discount on the equity for any costs of sale of the home.  This is because where a sale is not imminent the courts have held that the costs of sale should not be considered when valuing the equity in the home.  However, in the case of Harris v Harris v Schnelz Wells, PC,  COA 327590, August 30, 2016 (Unpublished), the court reduced the wife's equity value in the home by hypothetical costs of the sale of the home (realtor fees, transfer taxes, etc.).  In that case, the court previously appointed a receiver (Schnelz Wells, hereinafter referred to as SW) to marshal the parties assets because it appears the husband was not following court orders with regards to transferring assets or money to the wife.  SW appealed the ruling because the only funds or value of any kind remaining in the marital estate to pay SW's fees was the equity in the home.  The effect of reducing the wife's equity in the home by Including the costs of sale kept SW from using a lien against the home to collect it's fees. 

The Michigan Court of Appeals affirmed the divorce court's decision to reduce the wife's equity value by the hypothetical cots of sale.  It found that the lower court did not determine a sale was not imminent, in fact, given the ex-husband's behavior and the difficulty the wife was having paying the bills; the court found that she could have to sell the home in the foreseeable future and that in this particular case, it was proper for the court to consider the costs of the sale.  It also appears that part of the reason the trial court and the appellate court were willing to do this is that it would not effectively reduce or increase anything awarded to the husband, rather the reduction served really only to allow the wife to keep the home without the receiver being able to seek payment for its fees from the home.


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