Divorce is an emotional and financial process. The family home is one of the major marital properties that may require consideration during the dissolution of marriage. Although some couples may decide to live in a house, selling the home is the only viable option for most of them. Below are the legal factors that arise when selling a home during divorce.
Reasons for Selling a House During Divorce
Several factors may make couples consider selling their house during a divorce. Financial problems may have forced one spouse to sell the house due to their inability to pay the mortgage. Thus, selling the house will enable both of them to share the proceeds and move on. Also, having a home after the divorce means the two parties will continue arguing over who will pay for the maintenance, repairs, and property taxes. Selling the house also removes this possibility of conflict.
How to Sell a House During Divorce
If you and your spouse have decided to sell your house during the divorce, here are the general steps involved:
- Disclosure and Valuation: Both parties are expected to provide detailed information on the house’s financial status, including its current market price, any remaining balance on the mortgage, and any other costs that may be incurred in repairing it. A professional appraiser may establish the property’s fair market value.
- Division of Equity: After determining the net value of the house, spouses must agree on how to split the equity. Typically, the equity is divided according to the couple’s agreement during the divorce. However, exceptions may apply, such as When one spouse contributed more financially to purchasing or maintaining the house.
- Listing and Selling the House: Next, you must consider how to sell the house. You can decide to sell it yourself or hire a real estate agent who handles home selling during a divorce. An experienced agent can assist in the marketing of the property, in the acceptance of offers, and closing procedures.
Legal Considerations
There are several legal considerations to keep in mind when selling a house during a divorce:
- Marital vs. Separate Property: Sometimes, one of the spouses may have acquired the house before entering the marriage. The division of the proceeds from the sale will depend on whether the home in question is marital or separate property.
- Mortgage and Liens: If the house has a mortgage, both spouses must be discharged from the loan before the home is sold. Other encumbrances on the property, like tax liens, may also have to be discharged before closing.
- Capital Gains Tax: Capital gains taxes may be imposed on the sale of the house. It is advisable to seek the services of a tax consultant to determine the possible tax implications.
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