Divorce and the Family Home

 For the spouse who wants to keep the family home, it is a sanctuary. For the spouse who wants to sell, it is a source of uncertainty. No matter which side of the issue you find yourself, the question of how the family home is allocated is a source of stress.
From a legal perspective, a spouse with a community property interest in the home doesn’t lose their interest if they move out. However, from a practical perspective, the loss of income to the in-house spouse can cause concerns regarding who will make the mortgage payment and associated expenses? For the higher earning spouse, it’s one thing to pay for a house the family lives in, it’s another to pay for two households and the added possibility of paying child and spousal support. For many families, the solution is to sell the family residence. However, home equity buyout is another method and can occur in different ways.
One common way to facilitate equity buyout is having one spouse borrow the amount necessary to obtain a loan to buy out the other. Using an agreed upon appraisal the parties determine the fair market value of the house, the mortgage and other encumbrances are deducted to determine the equity value. This value is referenced by the parties to arrive at a buyout number.
However, to determine which spouse should be afforded the opportunity to buy out the other spouse, the Court reviews which spouse has a greater percentage of time with the minor children. If one spouse has significantly more time with the children, Courts will accommodate that spouse’s desire to buy out the other to keep the children in the family residence. However, as previously stated, the spouse making the buyout must qualify for a loan to purchase the other’s interest.
A buyout of the family residence should be made with caution and extra consideration. In the above example, when applying for spousal support the spouse buying out may use their need for income to qualify for a loan to stay in the family residence as a basis for higher support. So, unless you want to risk the possibility of paying higher spousal support (not always the fact) selling the family residence may be the best route.
For more information on family law matters contact The Reape-Rickett Law Firm at 661-288-1000.