Many married couples own their homes. The equity in a home is often a couple’s single most valuable asset. If a marriage ends in divorce, the disposition of the marital home often becomes a primary issue to be resolved.
While the simple answer to disposing of the marital home in a divorce is to sell it and split the proceeds or let one party buy out the other’s share, it gets complicated in a housing market that is booming – or conversely, during a housing market decline. If you’re selling, it’s tempting to time the market to try to get the best possible price for the home, but it’s a gamble. If one of you is buying the other out, how do you settle on a price in a volatile market?
Marital Property Law In North Carolina
In a divorce in North Carolina, marital assets – such as the home, cars, furniture, stocks and pensions – are subject to equitable distribution between the divorcing partners in the marriage. Marital assets are those that were acquired during the marriage and before separation. Both spouses have a claim to ownership of marital assets. The assets must be divided between them in a manner that is fair.
In an amicable divorce, the two spouses and their respective attorneys negotiate the division of marital assets as part of their separation agreement. When the parties cannot agree, one or both file separate claims for equitable distribution laying out how they want marital assets to be divided, and a judge ultimately makes the decision.
Our experienced North Carolina divorce attorneys at Charles R. Ullman & Associates work to help our clients come to an agreement with their estranged spouses about the division of marital assets. A separation agreement is faster and less costly and gives both sides some ownership in the decision of how the assets are divided. Asset division by separation agreement may also be reached with the help of a mediator, or a neutral third party.
Without a separation agreement, a judge would decide any contested issues involving the valuation and distribution of marital assets, such as your home. A judge might order you to sell your home and split the sales price, regardless of market conditions. Or the judge could set a buy-out price for the spouse who wanted to retain possession of the home, with no regard for what it might be worth later due to market changes. If either spouse failed to follow the court order, he or she could be held in contempt of court.
Pricing Your House for Sale When Divorcing
When neither spouse wants to stay in the family home or neither can afford to buy out the other, you’ll likely need to sell the house and split the proceeds. Obviously, you’ll both want to get the highest selling price.
You may choose a real estate agent to handle the sale of your home in a divorce. The agent would recommend a sales price based on comparable home sales in your area. It’s important to work with a real estate agent that you both trust.
If you cannot agree on an agent, each spouse may choose an agent and ask the two of them to recommend a third. But you should choose a professional for this task and agree to turn over all decisions possible to your agent. You do not need the stress of handling the sale of your home yourself in the middle of a divorce. Any disputes over decisions about pricing, prepping the home, or showings will delay the sale, which could in turn delay the resolution of your divorce.
With an agent handling an outright sale in a housing price boom, you and your spouse could quickly reap a profit. In a bad housing market, a real estate professional has the resources and ability to ensure that your house is shown to available buyers.
Pricing Your House for a Buyout When Divorcing
Often, if a divorcing couple has underage children, the custodial parent buys out the noncustodial parent so the children can stay in the family home. You could agree to a gradual buyout with payments made over time, but usually, the buyout is completed as part of the separation agreement and divorce settlement.
Because there is no real estate agent involved, you and your spouse would obtain a professional appraisal to determine the fair market value of the home. Either choose an appraiser together or each of you choose one and ask them to recommend a third. Then you should agree to abide by the third appraiser’s report.
In a quickly changing housing market, determining the fair market value of your home can become a sticky issue. The house could be worth thousands more within a matter of months if the market is booming. Waiting would be good for the noncustodial parent relinquishing the home and financially harmful to the custodial parent buying out their formal spouse.
Our divorce attorneys would counsel a client to not draw out their divorce by playing a waiting game. Trying to time the market is a gamble. In addition to the unnecessary stress, even in a booming real estate market, it is speculation to insist that prices will continue to rise. Waiting could backfire.
In a buyout, the parties should agree to a sale at the price suggested by the appraisal. In a growth market, the agreement could include a clause saying payment is required within 90 or 120 days of the appraisal, or the price is subject to an increase that matches market growth.
Contact Our Raleigh Property Division Lawyers
Determining the fair disposition of the family home in a divorce can be complex and have lasting financial implications. It is always better if the parties can come to an agreement on the division of marital property to present to the court.
The experienced and knowledgeable North Carolina divorce and family law attorneys of Charles R. Ullman & Associates strive to help clients resolve issues related to the dissolution of a marriage efficiently and effectively so they can transition to the next phase of their life. To learn more, contact us today. We serve clients throughout Raleigh and Wake County.