The Marital Residence: Decisions, Decisions, Decisions.

The Marital Residence: Decisions, Decisions, Decisions.

By: Preston C. Huggins, Esq.

When going through a divorce, both you and your spouse must make decisions regarding the disposition of all marital assets obtained throughout the length of the marriage. Not surprisingly, generally one of the most valuable marital assets parties maintain is their marital residence, or other parcels of real property. During the negotiation process of a marital settlement agreement, you can expect to hear terms such as “refinance”, “quitclaim deed”, or “equity”.  By seeking the advice of an experienced, and well-versed family law attorney, the confusion surrounding these terms can disappear. When one of our attorneys initially meets with a client, we will discuss with them various ways in which parties’ may dispose of their marital residence, as well as other parcels of real property. The following options are list of available avenues for you and your spouse to explore when discussing how best to dispose of a parcel of real property.

A. Sale of the Marital Residence

The first option available to parties when disposing of marital property is to place the home on the market for sale. This method is common for individuals who own a very large home that will be too big for just one spouse, parties without children, and if either spouse alone is unable to refinance the mortgage associated with the home into their sole name. Parties will need to decide on the realtor to use when placing the home on the market, the sale price, and what repairs, if any, need be done to maximize the home’s value before any sale. Upon the sale of the home at an agreed upon sale price, the parties generally will split the “equity” they have acquired in the home during the marriage. The amount of equity is simply the market value of a homeowner’s unencumbered interest in their property, that is, the difference between the home’s fair market value and the outstanding balance of all liens, mortgages, and the like on the property.

B. Either Spouse Retains Possession of the Marital Residence

The second option available to the parties when disposing of marital property is for one house to retain the exclusive use and possession of the home, while the other spouse is divested of any and all interest that may have in and to the property. Generally, with this option, the spouse remaining in the home will “buy out” the spouse that is relocating of their interest in the home. The amount parties will request in this buy out can vary greatly, but it is ordinarily calculated by determining the amount of equity the parties have acquired in the home, and dividing that number by two in order to provide the relocating spouse with their one-half share. Note that when parties select this option the spouse remaining in the marital home will need to be able to refinance the mortgage, if any, associated with the home into their sole name. The refinancing process can be accomplished by simply contacting your mortgage company and providing certain documents that they request. Also note that when choosing this option, the spouse relocating from the marital residence will need to execute a quitclaim deed transferring any and all interest they maintain in the property to the spouse remaining in the marital residence. A deed is simply a legal document, prepare by an attorney, that transfers property from one individual to another. As always, if you choose this option there are many caveats and facts specific to your case that will need to be considered. As always, one of our attorneys would be more than happy to discuss your specific factual situation as it relates to real property.

Note that in the event you and your spouse are unable to come to an agreement on specific terms outlining the details of one of the options above, Courts in Alabama have the power to decide these issues for you. From the outset, it is important to note that just because property may be held in only one parties’ name to the divorce, does not mean that a Court cannot control how the parcel of property is disposed. See Foreman v. Foreman, 379 So.2d 89 (Ala. Civ. App. 1980).    When deciding on how to divide property acquired during a marriage, including real property such as a marital residence, a Court has “wide discretion over . . . the division of property, and it may use whatever means are reasonable and necessary to equitably divide the parties’ property.” Mayhann v. Mayhann, 820 So.2d 836, 838 (Ala. 2001) (citing Grimsley v. Grimsley, 545 So.2d 75, 77 (Ala. Civ. App. 1989). Specifically, it is important to note that an “equitable” distribution does not necessarily entail an “equal” division of property. An “equitable” division is one that a trial court will make based upon fairness of the particular facts presented in each case. In order to make this equitable distribution, a Court will consider many factors such as “the length of the marriage, the age and the health of the parties, the future employment prospects of the parties, the source, value, and type of property owned, and the standard of living to which the parties have been accustomed during the marriage.” Lackey v. Lackey, 18 So. 3d 393 (Ala. Civ. App. 2009). This can become a bit of a gray area as there is no rhyme or reason relating to which of these factors carries the most weight. For instance, one judge can base his or her decision purely on the age and health of the parties; however, to the contrary, one judge may base his or her decision primarily on the fault of the parties leading to the dissolution of the marriage. As one can see, determining how to dispose of marital property can become rather tricky. If you and your spouse have questions concerning the best way to divide property, it is always important to consult with an attorney to see what works best for your specific situation.

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