For most couples, the marital house is not just an asset; it is the backdrop of your family life, full of memories, and often your single largest piece of shared property. Deciding what to do with it during a divorce is emotionally taxing and financially complex.
In divorce mediation the goal is to negotiate a solution that is both financially fair and emotionally feasible for both parties. Unlike court litigation, divorce mediation gives you the flexibility to craft creative, personalized solutions that make sense for your particular situation.
There are generally several options to consider for the marital home. The most straightforward option is that neither party keeps the house because you sell it and share the proceeds in some fashion. A second option is for one person to own the house and live there. A third option is to continue to co-own the home but only person lives there. A fourth option is nesting. In divorce mediation, you and your spouse usually work toward one of these outcomes for the property. If none of these common options are right for you, then you can develop a plan that works for your unique scenario.
The cleanest financial break is to keep living in the house together, keep paying for the housing expenses as you do now and then move out when the house sells and share the proceeds. In mediation you can agree upon the details of this plan such as setting the listing price, choosing a realtor, handling repairs/staging, and setting the date to list. The major focus of this option is agreeing on how the net equity will be shared. Net equity is the sale price minus costs. Costs include any mortgage, HELOC, closing costs, repairs, and staging.
Another option is that one spouse remains living in the marital home and pays the spouse that moves out for their share of the equity in the home. The spouse that stays removes the leaving spouse’s name from the mortgage and the deed and will solely own the house. The staying spouse usually either has to refinance the mortgage or do an assumption of the mortgage to remove the leaving spouse’s name and relieve them of this financial obligation. Sometimes the person who is staying must refinance a greater amount than the current mortgage to have access to the funds needed to pay the leaving spouse their amount of equity. An important factor is determining the fair value of the house to know the amount of equity each has in the house. The equity is the appraised value minus the current mortgage/liens. In divorce mediation you can work out the details of this plan such as setting a firm date for the buying spouse to remove the leaving spouse’s name from the mortgage and deed and pay them the agreed upon amount. If they fail to follow through by that date, the agreement typically has a backup plan of selling the house and sharing the proceeds in some way. In divorce mediation, you can also develop a payment plan for the payout of the equity if one lump sum is not feasible.
You may want to continue to co-own the house together but only one person lives in the house. This complex option is most common when couples want the children to remain in the home until they reach a certain age (e.g., graduating high school) or they do not qualify for an assumption of the mortgage and do not want to give up their awesomely low mortgage rate. Both names will remain on the deed/mortgage for a specified period. The house is then sold on a future date. There are a lot of what ifs to address in divorce mediation in this scenario. Who is paying the mortgage, taxes, insurance, utilities, maintenance, renovations, and repairs? What if you set a sale date (when the youngest graduates from high school) but one of you needs to sell the house or be removed from the mortgage sooner than that? What if the person staying in the house misses a mortgage payment? How will the equity be divided upon the eventual sale? Will you split the original equity, or factor in future market appreciation or depreciation? All of these concerns are addressed and agreed upon in divorce mediation.
A nesting option is usually a short-term option for most people and not a permanent plan, perhaps for a year or two. The nesting plan allows the children to remain living in the home, and each parent rotates between the marital house and a separate shared or individual residence. The parent-on-duty is at the marital home while the co-parent is at the secondary residence. You can then determine how to pay for marital home expenses and secondary home expenses during divorce mediation. You will also address allocating the proceeds from the sale of the home, whenever this may occur.
And sometimes none of these common options makes sense for you. During the process of divorce mediation, you can develop your personal plan. Nothing is forced upon you. At Westfield Mediation, you have the flexibility to create a divorce agreement made just for you.
Regardless of which option you choose, your divorce mediator must help you tackle the essential details of the plans for the marital house. By systematically working through these questions with a divorce mediator, you move the conversation from an emotional battle to a practical, financial transaction, ensuring the decision about your house is fair and equitable. The divorce mediator can ensure that your decisions make sense for the both of you and your new futures.
