Divorce and the Family Home

Let's Untie the Knot | Divorce and the Family Home

The most significant thing you need to remember when faced with dividing property at the end of a marriage is that Oregon is an equitable distribution state.  Equitable distribution means that the court will split the assets between the spouses in an equitable or “fair” way.  The most significant piece of marital property is generally the family home.  In the majority of cases, the marital property is divided equally and each spouse keeps their own separate property.  In Oregon, as in the majority of jurisdictions, the equity in the marital home is the market value of the home, less any debts or liens against it.  Equity is established by determining what the current market value of the home is at the time of separation.

Once the spouses reach an agreement as to the current market value of the house, any debts associated with the property (mortgage, home equity loans, taxes, etc.) are deducted from the market value to come to the equity to be divided.  This calculation is not an easy process and very often the parties come to different values. To come to a resolution, the parties typically retain a paid real estate appraisal or ask a real estate agent to do it. 

Once couples have ascertained the value of the house, there are three main options to divide the equity:

The spouses will sell the house and divide the proceeds.

Spouses can agree to sell the home and divide the profits from the sale.  This is the most common option since very often neither spouse is in a financial position to own the house alone.

One of the parties may choose to refinance the home and buy out the other party.

A second option is for one spouse to take complete ownership of the property and pay the other spouse his or her share.  The spouse purchasing the house from the other spouse will have to refinance the house so that the selling house is removed from the mortgage.  In determining whether the buying spouse can actually afford to take on full ownership of the home, the spouse purchasing the home should consider the costs of monthly mortgage payments, insurance, utilities, repairs, maintenance and property taxes.  The spouse buying the property should also consider potential tax implications since he or she would be entitled to a mortgage interest deduction.

Spouses stay on the title/deferred sale.

When the spouses have a relatively amicable divorce and have young children still at home they can ask the court to issue an order to defer the sale of the home.  Under this scenario, both spouses continue to jointly own the home for a set period of time and the custodial parent exclusive use and possession of the home during this time.  The intent of a deferred sale is to provide stability for the children and to minimize the disruptive impact of the divorce. 

In determining whether the deferred sale is a good option the court will have to determine whether the spouses will be able to afford the house following the divorce.  The court will consider, among other things, the spouses’ incomes, the availability of support, and other funds available to make payments.  An order for a deferred sale will specify how long the order is in place, after which time the spouses will sell the home.

Let's Untie the Knot | Postnup Primer

Postnup Primer

A post-nuptial agreement (also known as a “postnup”) is a formal, written consensus between two parties, entered into after the marriage occurs.  In order for...

Read More