One of the biggest assets that most people own is their residential property. This is not only their home and place, it is also a large part of the nest egg. People are often very concerned about what will happen with the marital home and how this asset is handled in a divorce case.
The Marital Home is Almost Always Considered Joint Property
Typically, the marital home where both parties reside is considered joint marital property and any equity in the home will be equally divided. This is true regardless of how the home is titled or whether the mortgage is in the name of one or both parties. In shorter term marriages, if one party owned the home before the marriage, then he or she may be able to back out the equity that existed in the property at the time of the marriage. For example, if the parties were married five (5) years ago and spouse A held fifty thousand ($50,000) dollars of equity in the home, and the home now has one hundred thousand ($100,000) dollars in equity, then spouse A could argue that he or she should receive the first fifty thousand ($50,000) dollars in equity and the parties should divide the remaining fifty thousand ($50,000) dollars equally. Many Michigan courts, but not all, would agree with Spouse A and award Spouse A seventy-five thousand ($75,000) dollars and Spouse B twenty-five ($25,000) dollars.
Will I Have to Sell My Home in a Divorce?
The marital home does not have to be sold in most cases if one party would like to keep the home. In many cases the parties will agree to sell the home with a mutually agreed upon realtor for the price that the realtor recommends, then the parties equally divide any proceeds from the sale of the home. Sometimes, the parties use some of the proceeds from the sale to pay off outstanding credit card or other debts to help them with a fresh start after the divorce.
In other cases, one party may want to stay in the home for a variety of reasons, including keeping some continuity for the children, remaining in the same school district, convenience of location, sentimental or other reasons. In those cases, the party seeking the home must buy-out the other spouse's equity in the home. This can be done through a refinancing of the loan associated with the home to obtain additional funds for the pay-off, a trade-off of other assets or other methods of making sure that the other spouse is somehow compensated for his or her share of the equity.
There are always variations in every case and family law cases are very fact specific which means that each case has its own set of facts that can strongly effect the outcome of any case. If you have questions about your home and how a divorce may effect your rights, contact Cameron C. Goulding, Family Law and Mediation for an evaluation of your situation.