Virginia divorce laws require that a couple’s property be divided fairly between the spouses. Real estate can be a difficult barrier to reaching this outcome because most real property is illiquid and cannot be easily divided. The family home therefore often presents a special problem because, for most divorcing couples, the family home is their largest single asset.
To address this problem, a divorcing couple should first obtain a reliable appraisal of their equity in the home. Many couples elect to obtain two appraisals to protect against bias in a single appraisal. Once the couple agrees on the fair market value of the house, they subtract all outstanding liens for mortgages, unpaid taxes, local assessment, and unpaid contractors’ bills. The result is the net equity, and this is the amount that must be divided fairly and equitably.
The first option for dividing the equity is to sell the house and divide the proceeds. This option may be infeasible if the family has small children. For example, the custodial parent may wish to keep the house to minimize disruption in the children’s lives. This leads to the second option: one ex-spouse keeps the house. The easiest way to accomplish this option is to refinance the house, thereby removing the non-possessory ex-spouse from the mortgage. It also helps the ex-spouses to disconnect emotionally from each other, and it provides cash that can be used to buy out the non-possessory spouse. A third option is to let one spouse live in the house and give the other spouse a lien for half of the equity. This lien must be satisfied when the ex-spouse who lives in the house wants to sell it. Sometimes divorcing spouses decide to exchange other assets to compensate one spouse for his or her share of equity in the home.
Anyone who is contemplating a divorce in which dividing the family home is likely to be an issue may wish to consult an experienced divorce lawyer for advice on the various methods that can be used to split the couple’s equity in the home. The process can be hotly contested, and negotiating a resolution isn’t always easy when emotions run on high. Fortunately, though, a skilled legal professional can help keep an eye on the desired outcome and present creative solutions to that end.