Mediating the Marital Home Issue
The marital home poses the biggest hurdle to divorcing spouses dividing their property. In most unions, the marital home is the couple’s major financial asset and its largest expense.
Ideally, both parties agree on the disposition of their residence. The probate court accepts the couple’s settlement agreement, equitably distributes their estate, and the parties move on with their lives. A spousal dispute over the fate of the home generates rancor and protracted, costly litigation.
Family Lawyers Resolve Differences
A skilled family law attorney recognizes each spouse’s divergent interests in the marital home and explains various options available to the couple. The experienced divorce lawyer addresses the feasibility of the positions the spouses have staked out. Helping the parties understand the implications of the various choices points them toward the best option and a solution that leads to a fair division of the home’s value.
Consider the following scenario. Before deciding to end their union, Alan and Betsy were married 13 years. They have lived in the same residence 11 years, the only home their 10-year-old son Carl has ever known.
Alan desires to sell the home and divide the proceeds between the parties. He wants to take advantage of the limited housing inventory in a seller’s market. He favors expenditures on repairs to get the house in mint condition. Alan wants to get out from under a burdensome adjustable rate mortgage on the property and relocate to an apartment or condo closer to his office.
Betsy wants to stay in the home she has spent years decorating. She is active in many community organizations and has close friends in the neighborhood. She believes the home is located in the best school district and wants Carl to complete his education there, with his life-long friends.
The couple is at loggerheads. Betsy wants Alan to transfer his interest in the marital residence to her. Alan wants to sell the house and split the purchase price. The spouses also disagree about the value of the home.
Equitable Distribution of Property
Under Massachusetts law, the court weighs several factors to determine who gets the home. It evaluates the financial condition of each spouse and their age and physical and mental condition. Also, the parties’ respective contributions to the home, its value and funding sources are examined. The court considers each mate’s employability and evidence of marital misconduct.
An important factor is which spouse has custody of the minor child. Where the spouses reach no accord on disposition of the residence, a court acting in the child’s best interests may emphasize stability and keep the minor in the childhood home to continue in the same school and maintain friendships. This deferred distribution is so-named because the home’s equity is awarded at a future date. It occurs when Carl’s emancipation prompts the sale. Deferred distribution can be beneficial to the parties if their financial circumstances enable them to hold onto their home until market conditions improve.
Postponing the sale of the home may be an option if Alan and Betsy can afford it. Letting Betsy and Carl reside there until Carl turns 18, enlists in the military or otherwise is independent of his parents’ support can avoid costly litigation. Divorce attorneys negotiate events that would trigger the house sale, such as Betsy’s remarriage or Carl’s emancipation. Family lawyers iron out details such as who pays the outstanding mortgage and real estate taxes and covers repairs. The percentage or specific dollar amount of the proceeds each spouse is to receive from the subsequent sale of the real estate is articulated. Betsy’s lawyer will insist on language in the agreement that she occupy the home rent-free to deter Alan from trying to collect rent or force a sale for nonpayment.
Depending on the size and worth of the couple’s marital estate, attorneys for Alan and Betsy will obtain a mutually acceptable appraisal of the home’s value. The parties might then agree on an asset division that awards Betsy the home and gives Alan a like amount in other assets, such as his pension, stocks and artwork. Alternatively, if Betsy has adequate assets to secure a loan, she might buy out Alan’s share.
Refinancing the Home
Besides preparing a new quitclaim deed reflecting Betsy’s ownership, Alan’s attorney might press for Betsy to refinance. Despite the attendant closing costs, a more favorable interest rate could ease Betsy’s financial burden. Alan would also benefit, from a credit rating standpoint, by not having his name on the mortgage. Removing Alan from the mortgage spares him a black mark if Betsy misses a payment. It also offers financial flexibility if he chooses to purchase a new property. Alan’s and Betsy’s respective attorney will negotiate a fixed deadline for refinancing. Then, if the process derails, the court can order a sale.
Can You Afford the Home?
Betsy’s divorce attorney will vigorously advocate for her desire to stay in place. However, a skilled family lawyer also will have a candid discussion with Betsy. Her credit score will be obtained and evaluated, and what home ownership entails will be addressed. Yard work and other home maintenance is costly and time-consuming. So too are household expenses, from the expected utility bills to the unanticipated replacement of the boiler. Frank discussions such as these educate spouses and enable attorneys to gauge whether the prime motivation is keeping the house or vindictiveness against the soon-to-be “ex.”
Once the house ultimately goes on the market, Alan and Betsy will have to settle on a property valuation from a mutually acceptable appraiser. The couple also will need to reach agreement on issues such as choosing a realtor, deciding whether to rely on do-it-yourself repairs or hire professionals, and when to list their home and at what price.
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Interested in learning more about mediation? Check out our article on whether divorce mediation will work for your case.