Co-owning a house after divorce, and divorcing with a house in both names, is an issue that arises when people divorce and own a home together. Couples have to decide whether they will continue to co-own their home after their divorce. When parties own a home and are going to divorce, the home can be sold to a third party, one party can buy the other party out of their share of the equity in the house, the home can be traded against another asset, or the parties can continue to co-own the house.
There are certain situations where it may be a good idea to continue to co-own a house after divorce. There are a variety of factors to consider, including both emotional and financial factors. You may want to continue to co-own your home, especially if you have children living at home. It might also make sense for people to continue to co-own their home if the market is not strong for sellers. Sometimes people continue to co-own, because neither one is in a position to buy the other party out of the house, but want to and decide to continue to own a home together until they reach a point when a buy-out is feasible. Sometimes people decide to continue to co-own because it is financially beneficial for them to do so, particularly if they owe more on the house than the house is actually worth. Sometimes people continue to co-own their home as an investment. The arrangement allows for both people to capitalize on any appreciation that occurs during the divorce. It avoids selling the property at a loss. In some situations, if it is an income producing property, it allows income to be generated and it makes it possible for children to remain in the house after divorce, which sometimes, just simply delaying the moving process reduces the stress of the experience.
The process can be difficult. If you think that you want to continue co-own the house after divorce, it is recommended that you decide on the terms of the agreement that you reach and have those terms documented in a written agreement with your spouse. You should also take the time and spend the money to have an appraisal of the home at the time of the divorce, even if you both think you have an idea as to what the home is worth at the time. Some factors to consider when you are drafting your agreement include whether or not you will both continue to live in the home, who will be financially responsible for the mortgage payment and other expenses, such as maintenance and repairs to the home. Since you will be divorced and filing separate income tax returns, you will also need to decide which party will be the party taking the mortgage interest deduction and what happens if one party does not want to continue in the co ownership relationship. You will also want to consider when the home will be sold and what happens if one party dies during that time period.
The situation might not always be favorable or positive. Continuing to co-own the home requires that both parties have a legal obligation to maintain the mortgage. If there is an agreement that only one party will make the mortgage payment, and then the person fails to do so, it will impact the other party as well. This type of arrangement also involves interactions with each other, which sometimes people do not want to continue to do because it can be stressful. This also requires additional planning, which some people do not necessarily want to do, whether it be the maintenance of financial documentation or future estate planning, in the event of the death of one party during the period of time where they divorced and continue to co-own the property.
Can divorced couples live in the same house?
If people choose to continue to co-own a home, they can continue to live in the house but are not obligated to do so.
Can divorced people still own a home together?
Here at DeTorres and DeGeorge, we pride ourselves on advocating for our clients in all situations. We can answer all of your questions about co-owning a house after divorce and what happens when you divorce with a house in both names. Contact us today to schedule a consultation. We are here to help!