For married homeowners, addressing a shared house can be the top priority during property division negotiations. Divorcing couples must generally make reasonable or equitable arrangements for dividing their marital estate accordingly.
The home where they live together represents not just their current residence but also potentially their largest shared asset. It may also be the source of their largest joint debt. Spouses need to address not just possession of the marital home when they divorce, and also how they’ll handle equity.
Possession relates to living in the home
Possession of the home is the ability to legally reside there. The spouse with possession of the home after the divorce can stay at the property or can even decide to sell it after the courts finalize the divorce. Who retains possession depends on factors ranging from the custody agreement for the couple’s children to pre-existing connections to the property before the marriage and the ability to afford the house after the divorce.
Equity, on the other hand, is the financial value accumulated in the home through the down payment, monthly mortgage payments, market appreciation and improvements to the property. The more equity spouses have accrued, the more likely it is that the spouse retaining possession may need to refinance. It is also possible to offset the value of the home with other marital assets.
Spouses need to be ready to address not just possession or staying at their home but also equity or the financial value of the property. Working with an attorney is important when trying to address key assets during a divorce to this end, given all that is at stake.