When forever doesn’t last as long as expected, you have to deal with the complicated matter of separating your lives. That can get you into some tricky territory, even if the divorce is amicable.
And one of the trickiest areas is selling a house after a divorce agreement issues are finalized.
If you and your ex are trying to make heads or tails of selling your home, here’s a breakdown of who gets what when selling a house after a divorce agreement.
The Underlying Financial Issues in Dividing Assets
First, it helps to understand the underlying financial issues at work in selling a house after a divorce. It’s all about dividing assets.
Your house is a financial asset, i.e. a liquid asset that gets its value from a contractual ownership claim. In simple terms, your home is worth something (the current fair market value of the house). And when you’re dividing assets after a divorce, the value of the house is split between the couple based on the divorce settlement.
However, this may change depending on the type of asset. In Virginia, a marital asset is all jointly owned property and other property (except separate property) acquired from the start date of the marriage to the date divorce was filed.
Conversely, separate property is property that was only owned by one spouse, which can include assets you owned or purchased prior to the marriage, as well as assets acquired in your name during the marriage via gifts or inheritance. If you purchased an asset during the marriage with income you had before the marriage, this may be considered separate property.
When dividing assets in a divorce, Virginia courts consider several factors, such as:
- The contributions, monetary and non monetary, of each party to the well-being of the family;
- The contributions, monetary and non monetary, of each party in the acquisition and care and maintenance of such marital property of the parties;
- The circumstances and factors which contributed to the ending of the marriage, specifically including any ground for divorce;
- How and when specific items of marital property were acquired;
- The debts and liabilities of each spouse, the reason for such debts and liabilities, and the property which may serve as security for such debts and liabilities;
- The use or expenditure of marital property by either of the parties for a nonmarital purpose or the dissipation of such funds, when such was done in anticipation of divorce or separation or after the last separation of the parties.
What is a Divorce Settlement?
This is important to understand because it shapes the decision that leads you to your final divorce settlement agreement.
A divorce settlement agreement is not a legal separation. The settlement agreement is a document that memorializes all agreements between divorcing spouses, including child support and property division. Once you sign, it becomes a binding legal contract spelling out the exact terms of your divorce.
As such, the property division spelled out in the settlement is the final version of the agreement.
Who Gets the House in a Divorce Settlement?
So, who gets the house in a divorce settlement? The short answer is it’s complicated.
Virginia is an equitable distribution state. Marriage is considered an economic partnership, property and debts must be divided equitably. This does not mean a 50/50 split, but rather a fair distribution of property and debts for the unique situation. Again, the courts can consider any factors they deem relevant and give orders to achieve equitability. For example, a court may order you to use separate property to make the settlement fair to both sides.
It doesn’t really matter who files first—that just sets the tone and has little to do with equitable distribution.
What matters is that by the time you sign a divorce settlement agreement, the details are legally finalized in a binding contract. As such, you have to know what you’re agreeing to before you finalize the agreement.
The Basics of Selling a Home after a Divorce Agreement
In general, you have three options when selling a home after a divorce agreement:
- Divide large assets
- Buy out your former spouse
- Sell your house
Which one you choose will be hammered out before you sign the final settlement. Here’s a breakdown of each one.
Option One: Divide Large Assets
Let’s say that you and your spouse both have large assets. For example, maybe you have a primary residence in addition to a vacation home.
In that case, you may choose to divide large assets between you so that both sides take ownership of assets of roughly equal value. You might take the primary residence and your spouse might take the vacation home, or vice versa.
This can make it easier to negotiate the final terms of the agreement and expedite your divorce. Plus, because you assume ownership of the property, you don’t need your spouse’s permission to sell once the divorce is finalized, nor do you need to haggle over who gets a bigger share of the property sale value.
Option Two: Buy Out Your Former Spouse
The second option is to buy out your former spouse. In this case, you pay your ex an agreed amount, based the market value of your home, to gain sole ownership. You might choose this route to maintain consistency for your kids or because the home is close to your job.
However, in order to buy out your spouse, you need access to sufficient cash which is not subject to the rest of the divorce proceedings. You also have to ensure you can still afford the mortgage payment on your income alone.
Option Three: Sell Your House
The most common option is simply to sell your house and split the proceeds. This provides both sides with a clean break—and comes with the advantage of cash flow to cover fees and expenses related to the divorce.
That said, this option requires the most negotiation, since you’ll have to iron out what percentage each spouse gets from the sale. You also cannot sell your house until you have your spouse’s permission, which can be complicated if you’re not in an amicable divorce.
In this case, it’s important to remember that neither one of you gets the house. If you’re selling, you each get your share of the property value, but neither one of you keeps the property itself.
The Legal Guidance You Need for Selling a House After Divorce Agreement
As you can see, selling a house after a divorce agreement is finalized isn’t as easy as listing your house on the market. You have to understand the legal implications of each option and what’s in your best interest. And for that, it pays to have a skilled divorce attorney.
Our team specializes in obtaining fast, uncontested divorces in Virginia. That way, you can get on with your life as quickly as possible without any lingering legal headaches. If you need to speak with a divorce attorney about your options, get in touch today to let us know how we can help.