What Happens to the House in a Divorce?

wooden house keychain with a broken heart on pink background - what happens to the house in a divorce concept

Every divorce involves dividing one household into two, but what happens to the building itself? Unlike other marital assets, you can’t just give each spouse half of a house. Giving careful thought to how the marital home and other real estate should be handled early in your divorce can help you make reasonable, practical plans for what happens to the house in your divorce, and can keep you from fighting for something you may not even want after the divorce is final.

What Happens to the House in a Divorce?

In a Michigan divorce, all of a couple’s marital assets are divided equitably between the parties. That includes anything earned, purchased, or improved between the date of the marriage and the date of the divorce. The family home is often one of the most valuable assets in a divorce. It also carries great sentimental value, and may be important to provide children stability, allowing them to stay in the same school, neighborhood, and friend groups. This can make it difficult for divorcing spouses to agree about what happens to the house in a divorce.

If a family owns a single piece of real estate (as many middle-class families do), there are generally three options available:

  • Award the home to one spouse and offset the other spouse’s share with other marital property
  • Award the home to one spouse who refinances the home and buys out the other spouse’s share after the judgment is entered
  • Sell the home and divide the net proceeds

If your family owns two properties, you might choose to each keep one and offset the differences in their value, or you might keep one and sell the other. Some families decide to sell everything and start fresh after the divorce is final. Divorcing spouses may choose to continue to co-own rental or investment property after the divorce. They might divide the rental income, save it for their children’s education, or simply wait until the housing market improves before selling the home.

How to Decide Who Gets the House in a Divorce

Unlike some other states, Michigan law does not specifically favor the custodial parent in deciding who gets the house in a divorce. Instead, judges are required to consider all the facts and circumstances, including either party’s care for the children or other dependents (such as aging parents) in reaching an equitable property distribution.

However, most Michigan divorces end in settlement, not trial. That means you and your spouse can decide who gets the house in the divorce during negotiations. Before putting the house on your list of “must haves,” take time to consider:

  • Can you afford the mortgage, taxes, utility, and other house-related expenses on one income? Consider whether you are anticipated to be the recipient or payor of child support and possibly spousal support.
  • Do you want to take on the maintenance of the property?
  • Would your life be better in a larger or smaller home?
  • Do you have the credit and income history to refinance the home and remove your spouse’s name?
  • Will receiving the home require you to give up assets you need more, like retirement accounts or liquid assets?
  • Do you want to continue to live in the house you shared with your spouse after your marriage is over?
  • Are you or your spouse better able to find new housing?
  • Do you have family or friends you can stay with during the transition?

Rather than focusing on the loss of your family home, it is important to think ahead, to what you want your home to look like in the future. All too often, the person who fights for the marital home in a divorce ends up selling it soon after. You may get a new job, find a new partner, or simply decide you can’t afford to maintain the property, financially or physically, on your own. By thinking about these aspects early in the divorce process, you can reach a decision about what happens to the house in your divorce that will set you up for success after the process is over.

Refinancing During Divorce: Can You Qualify for a Mortgage on Your Own?

In deciding what happens to the house in a divorce, a lot depends on how much that home is worth, and whether either spouse has the ability to refinance the property on their own. If you are considering taking the marital home, it is a good idea to talk to your bank or another mortgage company to determine if you qualify for refinancing, what your future monthly payment will be, and whether you can borrow enough to pay off your spouse’s share of the equity.

When couples are not proactive, it often results in additional trips to court after the Judgment of Divorce is entered, as the spouse receiving equity tries to enforce a judgment requiring the spouse receiving the home to refinance. When this is not possible, the judge may order you to sell your home anyway, even if both parties originally agreed on who should keep the home.

How to Sell a House After Divorce

If the Court orders you and your spouse to sell the home, either as part of the Judgment of Divorce or after enforcement fails, you and your spouse, or your attorneys, will need to work together to make that happen. As with all divorce issues, the better you and your ex-spouse can communicate, the easier it will be to sell your house after divorce. The Judgment of Divorce will likely include a specific realtor, require you to list the property at a price recommended by the realtor along with making improvements/repairs as recommended by the realtor, and to accept all reasonable offers. Both parties will need to sign the realtor’s agreement, as well as the closing documents after the sale is over.

If your ex-spouse refuses to cooperate, your attorney can file a motion to allow you to take charge of the sale, or to have a receiver appointed to sell the home for you and distribute the proceeds. You also may need to go back to court if your ex-spouse has failed to maintain the home, ordering your spouse to pay to have the work done.

Deciding what will happen to the house in a divorce isn’t easy. Balancing your financial and emotional needs can be hard to do. Whether you want to sell the home, get your equity, or continue to live in the house, you should make the decision with a clear picture of what life will look like in the future. At NSSSB, we want to help you transition to life after divorce. Our Ann Arbor family law attorneys can help you make the best choices about your real property, advocate for a fair and equitable distribution, and enforce the Court’s orders to sell or refinance the home. Click here to schedule a consultation with one of our experienced attorneys.