Throughout the course of a marriage, you may acquire assets jointly. One of the biggest assets most couples own is their home. So what happens to your house when you’re divorcing?
Assets in Michigan are split as equitably as possible, given the situation. Most of the time, it is beneficial for a couple that is divorcing to come to an agreement about the disbursement of assets. This can reduce the acrimony many divorces experience and lead to a smoother process for all involved.
To explain some of the nuances of what happens with jointly owned real estate during a divorce, we spoke with Mark Brace of Brace Homes, a top selling Michigan Realtor from the Grand Rapids area, and Penny Stupnicki from Title Resource, a Michigan title company.
What Happens To The Proceeds When Selling a Home During a Divorce?
Often, it makes the most sense to sell your home. In that situation, how is the money divided amongst the parties? Mark Brace says “This depends on whether there’s a judgement of divorce in place or not. If there is, the JOD will outline exactly how the proceeds are to be split. If a divorcing couple decides to sell prior to actually being divorced & can amicably agree on how the proceeds are split it can be done that way as well. It can also depend on who owns the home and who’s on the title.”
Again, if there is an agreed upon judgement, it simplifies the process. However, when that doesn’t happen, then a judge will issue an order. Penny adds, “If the divorce is finalized the judgement of divorce will typically list specifically how the proceeds from the sale of the home are to be disbursed. If the divorce is not finalized yet, the attorney’s involved in the divorce will typically provide a letter that both parties agree to and sign indicating how the proceeds are to be disbursed at close.”
An amicable divorce can help with settling your assets. Check out The Mitten Law Firm’s flat rate uncontested divorce option which will save hassle and money for both parties.
What Happens When One Party in a Michigan Divorce ‘Keeps’ The House? Does Anything Need To Be Done?
Occasionally, one of the spouses will keep the house. This often happens in divorces where children are involved, as uprooting the children can be deemed harmful to them. In that situation, what steps does the couple need to take? Penny tells us that “This depends on what is laid out in the Judgement of Divorce. Most of the time there is a time frame listed for the party keeping the home to refinance into just their name, removing the other party from the mortgage. The party not keeping the home is often times instructed in the JOD to sign a deed releasing their interest in the property and any future liens. The Judgement of Divorce will typically cover all of this and provided exact instructions for the parties to follow.”
Mark adds that a quit-claim deed can also be signed in that instance, moving the property into sole ownership. This is important, as being listed on the mortgage can impact the credit of the spouse that is not keeping the home.
How To Sell Your Home During a Divorce?
You might think that selling your home in the midst of a divorce is different than selling it for other reasons. While some articles advise taking the first offer to get the home sold quickly, Mark disagrees:
“Typically if it’s a home in an area that will be competitive I’d advise them (the divorcing couple) just as I do non-divorcing clients. The transaction is typically handled the same, other than sometimes communication is split up and sometimes we do end up being the mediator between parties, if they’re not on speaking terms. ”
In these cases, it is helpful to hire an experienced real estate professional to help you sell the house. It may help to discuss the responsibility for the agent’s commission when working on your divorce agreement.