How To Decide What To Do With Your Home, In The Midst Of A Divorce
Whether you are contemplating divorce, in the middle of a divorce or have recently finished with a divorce, there are several things you may want to consider.
If you have not filed for divorce and neither you nor your spouse want to be awarded the home, you can both agree to sell the house prior to filing for a divorce.
If you want to keep the home after the divorce is sold, you may want to consider staying in the home and have your spouse move away from the home if they do not want to be awarded the home.
The Preliminary Injunction
If a divorce or legal separation has been filed and is pending in Arizona, a court order was filed at the commencement of the divorce called a Preliminary Injunction. The Preliminary Injunction is a court order which states that you may not sell the community property, give it away without the written permission of your spouse. A Preliminary Injunction prevents either you or your spouse from selling your home during the dissolution proceedings without a written agreement with the other party.
If you and your spouse decide to sell your home during the divorce or legal separation, then it must be discussed and agreed upon. The next question you will have to decide is what to do with net proceeds from the sale of the home.
Are you going to equally divide the equity with your spouse? Are you going to pay off certain debts from the equity and then divide any remaining? Are you going to use your portion of those funds to pay any other equalizations that you owe to your spouse as part of the divorce settlement? What to do with the equity of your home should be determined before the close of escrow. If you and your spouse want to get the home sold and cannot agree upon how to divide the net proceeds, then most likely one of your attorneys is going to want to have those funds held in a trust account until an agreement or court order can be obtained.
Keeping The Home
The other option aside from selling the home during a divorce or legal separation is that either you or your spouse may want to be awarded and keep the home. If so, then most likely you will owe your spouse one-half of the equity of the house. In the vast majority of cases, under Arizona law, you cannot subtract the costs of sale from the equity before paying your spouse because the house is not being sold. Therefore, for example, if your home has $100,000.00 in equity, you would owe your spouse $50,000.00. Before you decide to just pay your spouse the $50,000.00, it is recommended that you do research with your chosen mortgage loan officer to make sure that you can qualify to refinance the home and buyout your spouse.
The spouse not keeping the home will mandate that you remove their name from the mortgage and pay them their portion of the equity. However, there is much more to consider such as, will you qualify for the new loan with the extra-amount added to your mortgage loan? Will there still be 20% equity in your home or will it rise to a level where you cannot obtain a mortgage because higher loan to value situation.
Getting The Representation You Need
Either way, whether or not you are represented by an attorney, you will want guidance from several professionals. If you are represented by an attorney, you will want to have this detailed conversation with your attorney about the facts of your case and obtain legal advice. If you are the spouse who wants to keep the home, you will want to seek the advice of a mortgage professional. If you and your spouse agree to sell your home, you will want to consider having an experienced real estate agent who can work with both you and your spouse objectively and to communicate with both of you so that you can sell your home for the best price possible and work with any problems that may arise during the divorce proceedings. Also, a real estate professional can provide you with a comparable market analysis of your home to help you and your spouse make the decisions as to what you want to do with your home during a divorce.
If you have recently divorced and you were awarded the home, most likely you have a specific number of days to refinance your home and pay your spouse their portion of the equity. Many divorce decrees will mandate that if you do not refinance the home and pay your spouse their portion of the equity that the house will be sold. It is very important to read the final court order called a Decree of Dissolution of Marriage to ensure that you are following the order so that you do not risk having to sell your home.
This blog should be used for informational purposes only. It does not create an attorney-client relationship with any reader and should not be construed as legal advice. If you need legal advice regarding this matter or any other family law matters, please feel free to contact, Sheri D. Shepard with Udall Shumway, PLC at (480) 461-5332, or contact an attorney in your area. Udall Shumway, PLC is located in north Mesa, Arizona and is a full-service law firm. Udall Shumway, PLC assists individuals and families throughout the East Valley and the Phoenix Metropolitan area.