In many divorce cases, the party’s main asset is the marital home. Therefore, one of the questions we hear the most in family law is “what’s going to happen to my home?” For some, this is a purely financial question. For others, there is a great deal of emotional attachment with concerns about the party’s children and their own future living arrangements. For most, the parties generally agree that there should be equal division of the equity, but the question is how that is accomplished. This blog post will cover the parties’ options in dividing the marital home.
Option 1: Sell the Home
This is the “cleanest” option and allows both parties a fresh start, and may provide the most financial return to each party. If neither spouse wants to stay in the home, or neither spouse can afford to stay in the home, the only option the parties have is to sell the home. Typically, the parties will try to set the terms to avoid further conflict as much as possible, including deferring decision making to a third party (such as realtor) for things like setting the price, marketing the property and preparing for sale.
Option 2: Buyout and Refinance
This option is usually reserved for a party that wants to remain in the home. A buyout is a longer process. However, a buyout will provide some comfort to a party that can afford to remain in the house, while offer the other party a clean break and a share of the equity. Typically, Courts will allow one party to buy the other party out pending an evaluation of the property (appraisal, current market analysis, etc.). If the buyout fails, the Court will require the home to sold.
A buyout typically requires a home refinance of some kind. The most common scenario is a refinance of the mortgage plus the vacating party’s share of equity. This provides the vacating party with a lump sum payment they can use for expenses or invest in a future home, retirement, etc. while removing them from the financial obligation of the home. There are other scenarios as well. A family law attorney will help set up timelines for refinance in the final decree, refer you to other professionals that can help with refinance, and make sure that there is proper protection in the event a buyout fails (potentially including the opportunity to buyout the initial refinancing party).
Option 3: Assumption
Some mortgages allow for a spouse to assume the mortgage, rather than refinance. This is becoming more common as interest rates climb, as it allows the mortgage to remain at the original interest rate. The spouse will still need to qualify for the assumed mortgage in his/her individual name. The downside to an assumption is that there are no funds available to buyout the other spouse. Therefore, this is only a viable option if the parties have other assets to use to buyout the spouse’s interest in the home.
Option 4: Other Options
Sometimes there are practical concerns that the parties have that make a sale or a buyout difficult or burdensome in the short term. You will want to talk about the specific facts with your attorney, but typically both parties will need to be on the same page to accomplish something other than a sale or buyout. For example, if the parties are concerned about their minor children, the parties could delay the sale or buyout until the minor children reach the age of majority. Another option is co-ownership for a predetermined amount of time. This will need to be clearly defined as the parties will no longer be married. Again, while these are recommended in most situations, some fact patterns in family law are quite unique.
During an initial consult, you will want to ask about your home if you own one. The attorney should give you an honest review of the situation to best set your expectations. The family law attorneys at Parnell, Michels & McKay found will do our best to provide you with a realistic assessment as to what solutions are possible for your home. If you are considering divorce, we are experienced in providing both the necessary legal advice and practical guidance If you are interested in learning more about how your home would be treated in the event of divorce, please contact us to learn more.
Rory Parnell is a graduate of Southern New Hampshire University and New England Law – Boston. Rory worked full-time, for the then Law Offices of Parnell & McKay, every year he was in law school, and has been working at Parnell & McKay and then Parnell, Michels & McKay since 2002. Rory has been a partner at the firm since 2017, and dedicates his practice primarily to civil litigation.
Rory has been admitted to the New Hampshire and Massachusetts Bar Associations since 2011, and is licensed to practice in the United States District Court of New Hampshire. Rory works primarily in the areas of Injury (including motor vehicle collisions, motorcycle collisions, slip and falls, dog bites, trip and falls, and other injuries), Workers Compensation, Real Estate Litigation, Landlord/Tenant, Disability, and General Litigation areas.
Awards and Recognition's:
2021 Forty Under 40 Honoree from the Union Leader
2020 Pro Bono Distinguished Service Award
2017 New Hampshire Bar Foundation -Robert Kirby Award
2014 Pro Bono Rising Star Award
L. Jonathan Ross Award Winner for 2024
Professional and Charitable Affiliations:
Member – New Hampshire Association for Justice
Member – Massachusetts Academy for Trial Attorneys
Member – Queen City Rotary Club
Vice Chair – 603 Legal Aid
President – The Bridge Project (501c3)
Member – Daniel Webster-Batchelder American Inns of Court
Member – NH Bar Lawyer Referral Service Committee