Should You Keep, Sell, or Surrender Your Home in a Michigan Divorce?
Once you get married, anything you and your spouse purchase together becomes shared marital property, including real estate. In some cases, things you brought into the marriage may also become marital property, depending on how they are used and whether or not you have a prenuptial agreement in place to protect personal property.
This is important, because when you divorce, part of the process involves the separation of assets. In Michigan, the division of assets must be “fair and equitable”. While this doesn’t necessarily mean an even split, it’s usually close.
How does this work when you and your spouse own a home together? You have three legal options. You can either keep the home, sell it and split any profit, or surrender it to your spouse. Which option is right for you?
If you decide to keep the home, you will become solely responsible for any and all costs, including remaining mortgage debt. This means you need to carefully consider whether or not you’re able to manage mortgage payments on your own. In some cases, an award of spousal support can help you to manage these costs, but you shouldn’t count on a ruling of spousal support, or a specific amount.
In addition, you may have to pay out any asset value your spouse is due. Suppose joint equity in the home is valued at $100,000. In a fair and equitable settlement, your spouse may be owed half that value. If you don’t have $50,000, you may be able to make up for the amount by ceding other assets, such as a stock portfolio, jewelry, or other real estate, for example.
Although one or both parties may wish to remain in the family home following divorce, if neither party can buy out the other and manage monthly mortgage payments alone, keeping the home simply might not be feasible. In this case you may elect to sell the home and divide the profits.
It’s a common misconception that leaving the family home prior to divorce nullifies your rights to this marital asset, but this is not the case. Real estate is still a joint marital asset until the divorce is final, and both parties have equal claim to it, even if one has already moved out of the residence.
You can, however, surrender your right to the home in your divorce agreement, allowing your spouse to keep it. In this case, your spouse will have to reimburse you the value you’re due, based on equity, either with cash or some other form of compensation.
In some cases, spouses agree that they will retain joint ownership of the home until such time as it is sold, although only one party will continue to live there and that party will be responsible for mortgage payments and other expenses. Typically, this type of agreement includes an offset at the time of sale for the added expenses the remaining party has contributed to the equity in the home following divorce.
Division of assets can be difficult, especially when a high-value asset like a home is involved. Contact the qualified lawyers at The Gucciardo Law Firm today at 248-723-5190 or online to schedule a free consultation and learn more about your options.
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