What happens to the marital home in a contested divorce?

In a contested divorce, handling the marital home can be a complex and emotionally charged issue. Property division laws vary by jurisdiction, but most places follow either "community property" or "equitable distribution" principles. In this guide, we’ll explore what happens to the marital home in a contested divorce, examining key factors like ownership status, financial contributions, custody arrangements, and court considerations that impact the final decision.

1. Understanding Property Division Laws: Community Property vs. Equitable Distribution

Community Property States: In community property states, all assets acquired during the marriage are generally split 50-50, regardless of individual contributions. The marital home, if purchased during the marriage, is typically considered community property. If only one spouse’s name is on the title but the property was acquired during the marriage, it might still be subject to division.

Equitable Distribution States: Most states follow equitable distribution principles, which don’t require a 50-50 split. Instead, the division is "fair and equitable," considering factors like each spouse's financial contributions, future earning potential, and even fault in the divorce, if relevant. Here, the marital home may not be Contested Divorce New York State equally divided; one spouse may receive a larger share based on their needs or contributions.

2. Marital vs. Separate Property: Establishing Ownership of the Home

The court will first determine whether the home is marital property or separate property.

Marital Property: Generally includes assets acquired during the marriage, regardless of whose name is on the deed. If the marital home was bought with joint funds or with the intent of it being the family home, it is likely considered marital property and subject to division.

Separate Property: Assets owned before the marriage or acquired through inheritance or gifts specifically to one spouse are often classified as separate property. If one spouse owned the home prior to the marriage and there was no commingling of funds, the court might consider it separate property, reducing its availability for division.

3. Factors Courts Consider When Dividing the Marital Home

Courts evaluate several factors when deciding what to do with the marital home. Each factor can significantly impact the court’s decision on whether to sell the home, award it to one spouse, or offer another solution.

1. Financial Contributions: Courts often assess which spouse contributed more to the purchase and upkeep of the home. If one spouse made the down payment or covered most mortgage payments, they might have a stronger claim to the home.

2. Custody of Minor Children: When children are involved, courts may prioritize stability by awarding the marital home to the custodial parent. The goal is to minimize disruptions to the children’s lives and allow them to remain in a familiar environment.

3. Financial Ability to Maintain the Home: Courts look at whether either spouse can afford the home’s expenses, including the mortgage, taxes, insurance, and maintenance costs. If neither spouse can afford the home, the court may order it sold and the proceeds divided.

4. Fault in Divorce (Where Applicable): In some jurisdictions, marital misconduct—like adultery or abandonment—may impact property division. If one spouse’s behavior led to the dissolution of the marriage, the court might award a larger share of the marital home to the other spouse.

4. Common Outcomes for the Marital Home in Contested Divorces

Selling the Home and Dividing Proceeds: If both parties are unable to reach an agreement or neither can afford the home alone, selling may be the best option. In this case, the court orders the sale of the home and divides the proceeds equitably. Costs like real estate fees and outstanding mortgage balances are deducted before division.

Awarding the Home to One Spouse: If one spouse can afford the home and has a stronger claim—such as being the custodial parent or the primary financial contributor—the court may award the home to them. The receiving spouse may be required to buy out the other spouse’s share, which could mean refinancing the mortgage to remove the other spouse’s name.

Deferred Sale Orders (Keeping the Home Temporarily): In some cases, especially when children are involved, courts may issue a "deferred sale order." This allows the custodial parent and children to remain in the home temporarily, often until the children reach a certain age. Once the conditions of the order are met, the home may be sold and proceeds divided.

Co-Ownership Post-Divorce: Although rare, some couples agree to co-own the home temporarily, usually to support children or manage finances until a future date. This arrangement requires cooperation and legal agreements on costs, repairs, and eventual sale terms.

5. Legal and Financial Implications of Keeping or Selling the Home

Tax Implications: Selling the home might trigger capital gains tax if the value has appreciated significantly. However, if the home was the primary residence, each spouse could exclude up to $250,000 of gains, depending on tax laws.

Mortgage and Title Concerns: If one spouse keeps the home, they often need to refinance to remove the other spouse’s name from the mortgage, which can be challenging if they lack sufficient income. Additionally, the title should be updated to reflect sole ownership.

Impact on Credit: If both spouses remain on the mortgage post-divorce, late payments or defaults could impact both credit scores. To avoid this, some spouses insist on selling or refinancing.

6. Working with a Mediator or Financial Planner

In contested divorces, mediation or financial planning can ease decision-making. A mediator helps couples negotiate terms related to the marital home, potentially avoiding court involvement. A financial planner can clarify long-term costs of keeping or selling the home, helping each spouse make informed decisions.

The division of the marital home in a contested divorce is rarely simple. Courts consider factors like financial contributions, child custody, and each spouse’s future needs. The final decision could result in selling the home, one spouse buying out the other, or even deferred sale orders for the sake of minor children. Consulting legal and financial professionals can provide clearer insights and help secure a fair and manageable resolution for both spouses.