1. It may or may not be a “marital” residence.
If the house was purchased during the marriage, it is presumed to be marital property, whether it is purchased in the name of one or both spouses. This presumption can be overcome by showing that one spouse used non-marital funds for the purchase and kept the house in his or her sole name. If a house purchased by one spouse prior to the marriage is later placed into joint tenancy, it is presumed that a gift to the marriage was intended.
2. You may have to live with your spouse during the divorce.
Although living with your spouse during divorce proceedings is typically an unpleasant experience, it is difficult to force someone out of the home. There are three ways this can be accomplished: (1) filing a petition for exclusive possession; (2) an order of protection; or (3) agreement. In the case of a petition for exclusive possession, the court can require a party to leave the residence “only in cases where the physical or mental well-being of either spouse or their children is jeopardized by occupancy of the marital residence by both spouses.” While this seems to suggest the bar has been set pretty low (most divorcing parties would agree living together jeopardizes their mental well-being), the case law has actually set the bar high, requiring a “dangerous” situation. Further, an evidentiary hearing is required, so not only is this an uphill battle, but a lengthy and expensive one as well. The second way a party can be forced to leave the marital residence is an order of protection. In this case, the court needs to find that there is abuse or threat of abuse to a party and/or the children. If a party obtains an ex parte (without notice to the other side) order of protection, that will keep the spouse out of the house for 3 weeks, unless a motion requesting a hearing sooner is filed. At that point, there is a hearing where the court will determine whether or not to extend the order of protection for two years. The third way to have your spouse leave the marital residence is by agreement. Typically, if minor children are involved, an attorney will advise his or her client not to move out of the marital residence until the issue of the parenting time schedule is addressed. Once that is resolved, it is easier to agree upon separate living arrangements if the parties can afford to maintain both the marital residence and a second residence at the same time.
3. You don’t give up your rights to the house by moving out.
Many clients are concerned because they want to move out, but are worried they will be “giving up” their rights to the marital residence. However, moving out of the house doesn’t relinquish any rights you may have in the home, and doesn’t change the classification of the home as marital or non-marital.
4. Think twice before deciding to keep the big house.
It is often the case that the marital residence is too big and/or too expensive for one of the parties to maintain on a single income. I suggest that if a client is the slightest bit concerned they can’t afford it, they shouldn’t keep it. I have had many clients regret keeping the big house, and none who have regretted downsizing.
5. There are benefits to not keeping the house.
Allowing your spouse to buy out your equity in the house lets you to walk away without having to deal with the hassle of the listing and selling the home or paying closing costs on the sale. You can then take that money and invest it into a new residence in the current market where home prices are down.
6. The court won’t value your furniture.
Unless you have a house of valuable antiques, the court is not interested in valuing your couches, televisions and décor. If spouses don’t agree to value furniture between themselves, the court will simply require an equitable division of the furniture.
7. Consider the debt.
If you keep the house, not only will you have to pay your spouse for his or her share in the equity, you will likely have to refinance jointly held mortgages into your sole name. Obtaining a mortgage may take time if you are using income from child support or maintenance to qualify. In that case, you want to give yourself at least 6 months to complete the process.
8. You can finalize the divorce before the house sells.
The details related to the listing agent, price, repairs, sale price, living arrangements and payment of expenses while the house is for sale can be included in your marital settlement agreement.
9. Be aware of house related tax issues.
Make sure that your settlement agreement allocates the house related credits and deductions for mortgage interest, real estate taxes, capital gains and the like. Starting in 2019, real estate taxes are no longer deductible over $10,000 per year, and interest on HELOCs is no longer deductible in certain circumstances.
10. The kids will be OK if they don’t stay in the house.
The most frequent reason clients tell me they want to stay in the house is the belief it is best for the children. However, there are other considerations critical to preserving the children’s best interests, such as minimizing conflict between parents. Most children have no issues transitioning to a new house. In my experience, they are actually excited about decorating their new rooms and creating new memories. It is better for the children to be in a smaller house, with a less stressed parent, than to be in a bigger house where a parent is struggling to pay the bills each month.