What happens to the family home will depend on the facts of each case. If the wife and husband can agree between themselves on what should happen to the home, the court virtually always will accept their decision. If the wife and husband cannot agree, the court will decide.
If the parties own a house, condominium, or cooperative apartment and they have children who are still living at home, the law favors giving the house to the spouse who will have primary custody of the children, if it is affordable to do so. This promotes continuity in the lives of the children as well as in the life of the spouse who will live in the house.
If the parties cannot afford to keep the house, it may be sold and the proceeds divided (or perhaps given to one party). Division of money from sale of the house generally is made after paying off the mortgage and the costs of the sale such as commissions to the real estate brokers, transfer tax, and attorneys fees.
In some cases, there is a middle-ground approach: The spouse who has primary custody of the children will have a right to live in the house for a certain number of years, such as until the youngest child graduates high school. At the end of that time, that spouse will buy out the other spouse’s interest or sell the house and divide the proceeds.
A variation on these arrangements is to give one spouse a right to buy out the other spouse for a fixed period of time, such as thirty days. If the first spouse cannot buy out the other spouse (perhaps because he or she was not able to obtain financing), then the second spouse has an equal period of time to buy out the first spouse. If neither spouse is able to buy out the other, then the house will be sold and the proceeds divided.
When only one spouse is going to occupy the house after a divorce, arrangements need to be made for payment of expenses related to the house. A common arrangement is for the party living in the house to pay the mortgage, property taxes, utilities, and routine repairs. If the spouse who is not living in the house retains an interest in the house (such a right to share in the proceeds when the house is sold at a later date), both parties might share in the costs of major repairs. Major repairs might be defined by the nature of the expense (repair of roof, replacement of appliance) or by dollar amount–for example, any repair costing more than $200.
In some cases, the monetary interest of the spouse who is not living in the house may be set at a fixed dollar amount. That amount could be adjusted for inflation based on the Consumer Price Index (issued by the U.S. Department of Commerce, Bureau of Labor Statistics) or by the percent increase in the value of the house from the date of the divorce to the date of sale of the house.
Here is an example of the second situation. Assume that a house is determined to be worth $150,000 at the time of divorce in the year 2000 and that the spouse who moved out was given a $30,000 interest in the house at the time of divorce. If the house is sold ten years later for $300,000, the spouse who originally was given a $30,000 interest in the house would then receive $60,000 since the value of the house doubled between the time of divorce and the time of sale.
When a court or a marital settlement agreement gives the entire interest in the house to one spouse and makes that spouse responsible for paying future mortgage payments, that does not mean the spouse who moves out is no longer potentially liable for the mortgage. Banks and other lending institutions are very reluctant to give up the security of having more than one person responsible for the loan. The spouse who moved out still is responsible for the loan in the event the other spouse does not pay the mortgage.
The legal remedy for the spouse who moved out is a hold harmless provision. That means that if the spouse who moved out is obliged to pay a loan that the other spouse was supposed to pay, then the spouse who moved out can collect the loss from the spouse who has the house. The spouse who moved out can sue his or her former partner for any lost funds. Assuming the house has a positive net worth, the court could order the house sold in order to pay back the spouse who moved out.