House Challenges Part 1

Aug 5, 2022

In many divorces, the family home may be the most valuable asset. Unlike other financial assets, there is no practical way to divide a house!

In almost every mediation case, the choices are limited to these possibilities:
• You will keep the house.
• Your soon-to-be ex will keep the house.
• The house will be sold.

On the surface, it would seem simple to make one of these choices [about handling the family home], but often it is not. A number of factors can complicate the decision.

On the surface, it would seem simple to make one of these choices, but often it is not. A number of factors can complicate the decision.

Maintaining Stability for the Children

While one of you may want to sell the house, the other spouse may feel strongly about keeping the children from having to move away from where they have been living. This can become a difficult discussion if both spouses want to keep the house and live there with the children, as the other spouse may have a sense of being uprooted or otherwise being relegated to an inferior parental role.

Emotional Attachment

Depending on how long you have lived in your home, each of you may have made significant efforts to improve your home to fit your needs. Being asked to forego the opportunity to live in a home that you helped to create can stir up some strong emotions.

Financial Factors

  • Can you afford to stay? As you transition from living together under one roof to maintaining separate residences, many find it challenging to keep up with the cost of the mortgage, utilities and other expenses on one income—even if supplemented by support payments being made to you by your ex. Depending on the duration of the support payments, a short-term plan that pays the bills may not be sustainable in the long term.
  • Buyouts can be expensive. If you are going to keep the home, chances are that your ex will be looking to be paid their share of the equity, unless you have something else to trade (like retirement or investments). For many, the only way to get the equity to the other spouse is to borrow more money to pay off your ex’s share of the equity in the home you are keeping (and this means higher monthly payments).

Flexibility Factors

  • Transitioning. Unless you are going to sell the house immediately, there will be a period of time where the current ownership and mortgage will remain the same. This situation requires discussion about how long a transition is acceptable to both of you (which often means, how long is someone willing to stay on a mortgage for a home where they are not living). Transitions may be a matter of months, so some decide that they will stay on the mortgage together for a longer period of time, to help the other spouse build credit and so as not to uproot the children.
  • Planning for Contingencies. This can often be equivalent to asking “what if?” For example, perhaps you and your soon-to-be ex decide to stay on a mortgage for a period of three years, but one of you asks what would happen if that arrangement isn’t workable any longer. You can always set a minimum period of less than three years (to give time to the person who has to refinance), after which either spouse can terminate joint ownership by requesting a buy out or a sale. Similarly, there may be a plan for you to get bought out by your spouse. You may ask, “What if they can’t refinance by the time I want to be off the mortgage?” There can always be a fallback plan to put the house on the market if refinance can’t be completed in a specified time.

Watch for the second installment of this discussion!