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What Happens to the House as We Divorce?
One of the biggest misconceptions people have when they’re heading into a divorce is how their assets are “supposed” to be split up, especially the marital home. Even in an amicable divorce, this can become a contentious issue, especially when one party realizes they aren’t going to get half of the marital property.
A 50-50 split isn’t necessarily how a judge may decide to handle the assets. Because dividing assets isn’t an easy process, it may take weeks to negotiate a final settlement.
Obviously, the biggest issue will be the marital home, since it’s most likely the biggest joint marital asset.
Here’s what you need to know about how New Jersey handles the marital home and other assets in a divorce.
New Jersey courts are guided by the legal concept of “equitable distribution.” This means that the court must split the assets equitably, or fairly, between the former couple.
This doesn’t mean they must split the property evenly. The law states that the distribution must fairly split both the property and debt and there are several areas that must be considered in this decision. The most important of these considerations is whether the house is marital property or separate property.
Marital or Separate Property
The first thing that’s determined is if the house is a marital asset or a separate property. In a nutshell, a home is marital property if it was bought after the marriage. A separate property is if a home was owned by one party prior to the marriage.
Unless there are other extenuating circumstances, such as a prenuptial agreement, then the home is only up for equitable distribution if it’s a marital property. If a home is up for distribution, it’s not possible to split the physical piece in half and take a chunk of the house.
Here are the options your attorney will present for “splitting” the house in your divorce.
1. Sell the Property: This is probably the easiest option and the one that’s most common. Here, you simply list the house on the market, sell it, and then split the profits from the sale.
Another option is a non-equitable split of the profits if one party agrees in exchange for getting consideration on another piece of the marital property. It’s this kind of give-and-take in negotiations that often requires time to finalize a divorce settlement.
Realistically, many people can’t afford to pay for and maintain their marital home once they’re divorced since their income level changes. That’s why they choose to sell the house instead.
2. One Partner Buys Out the Other: A lesser-used but still viable option that some people choose is to have one party in the divorce buy the other party’s equity in the home. This will happen if one partner decides they want to keep the home and not sell it.
This means the home will have to be refinanced so that the spouse who wants to buy the house is the only one listed on the mortgage. The non-purchasing spouse will receive their share of the home’s equity from the purchasing party.
This can either be in a direct payment or in some other negotiation for consideration with the remaining property. However, the closing costs for the mortgage refinance will have to be paid, and the split of this must also be negotiated by the parties and their attorneys.
3. Co-Own the Property: Rarely, you may see two spouses who are parting amicably and decide to co-own the house. This can mean they either rent out the property and then split the monthly proceeds and costs, or else one party can be allowed to stay in the home. This is a seldom-used option because it’ll require the two parties to co-own a property, sharing in the cost and upkeep, for years after divorcing.
No matter how easy the split was, the same tensions that led to the end of the marriage can complicate this. It’s usually used only in extreme cases, such as when the couple has children in high school that need to stay in place for a year or two to finish out school. As a temporary measure, it’s feasible, but not recommended.
New Jersey Divorce Court Determining Factors for Division of Marital Property
In a contested divorce, both parties may lay claim either to the house itself or to a larger share of the profits from the home’s sale. If that’s the case, a judge will have to rule on this, using the following in reaching a decision:
- The duration of the marriage
- The health (both physical and emotional) of the partners
- The standard of living for each party
- The level each partner has contributed to buying and improving the home
- The contributions of one party in the role of a homemaker
- The finances of the spouses
- The value of the home to be split between the parties
- How the property distribution will impact the party’s taxes
- The partner’s debt status.
After determining child custody, the house is probably the biggest issue when it comes to a divorce. Contrary to many people’s expectations, the house isn’t a guaranteed 50-50 split.
But it’ll be part of a give-and-take negotiation that will hopefully get you the best result possible. Having an experienced family law attorney on your side will help you navigate deciding how to “split the house” as fairly as possible.
Contact the Experienced Family Law Attorneys at Smedley Law Group in Woodbury, NJ Today for More Information About How Your Marital Home and Other Assets Will be Handed in Your Divorce
If you’re thinking about filing for divorce, you’ll also most likely be dealing with another matter like child custody, child support, or division of assets, so you’ll need to speak with a qualified attorney. The New Jersey family law attorneys at Smedley Law Group represent clients throughout the state, including West Deptford, Woodbury Heights, Runnemede, and Westville. We understand how challenging this time can be for you, which is why we will fight hard to protect your interests, and the interests of your loved ones, throughout the legal process. Call us at (856) 251-0800 or fill out our confidential contact form to schedule a consultation. We have an office conveniently located at 750 Cooper Street, Woodbury, NJ 08096.
The articles on this blog are for informative purposes only and are no substitute for legal advice or an attorney-client relationship. If you are seeking legal advice, please contact our law firm directly.