Dividing Real Estate in a Divorce
In addition to child support, alimony, and child custody, one of the major issues that comes up during a divorce is how to divide real estate between the two soon to be ex-spouses. To be clear, real estate refers to any land, houses, and buildings that the couple owns.
For most divorcing couples, the primary concern regarding real estate is their house. Which spouse gets to keep the house? How will the other spouse receive their fair share of the property? In most cases, the first item on the agenda is to determine the value of the house. If the house has little or no value due to debt, the house might go to the spouse that is willing to take on the debt. If neither spouse wants the house, they can choose to sell the house and divide the proceeds after all debt has been paid.
In situations where the couple has children, it is common for the children and the parent with primary custody to remain in the house while the other spouse moves out. For this type of arrangement, the spouse that stays in the house will have to find a way to give the other spouse his or her share of the house’s equity. For example, if the mother decides to live in the house with the children, she can refinance the house in order to pay her ex-spouse his share of the house’s equity.
If the couple cannot come to an agreement, the issue can be taken to court and a divorce judge will divide the real estate according to state law. Property and real estate division is handled differently from state to state, but they generally fall under one of two categories: community property or equitable distribution. In a community property division model, property that is owned by both spouses is divided equally, while separate property is awarded to the spouse that owns it. In an equitable distribution model, the property is divided fairly but not always equally between the two spouses. For example, a judge may decide to give the house to the mother because she has primary custody of the children and the father makes significantly more money that she does.