Dividing the Marital Residence
The marital home is often one of the bigger assets to be divided in the context of a divorce. There are two options available regarding division of the marital residence. First, one party can keep the home and buy the other party out for their share of the equity. Equity would be determined by the fair market value of the home minus any mortgages or other liens on the home. The second option is for the home to be sold and the proceeds divided among the party. As a matter of equitable distribution, the disposition of a home would generally not be heard until grounds for the divorce have been established and the matter is scheduled for court. However, the family court has the authority to make determinations regarding a marital home even prior to or an equitable distribution hearing or entry of a divorce decree. The court can grant one of the parties exclusive possession of the home while the divorce is pending under Section 3502 of the Divorce Code. An award for exclusive possession should not be given lightly and the party requesting it has the burden of proving its necessity.
Section 3323 gives the court general equity powers to issue any order necessary to protect the interests of the parties or as justice requires. This can include an order mandating a party to pay the mortgage on time, forcing the home to be sold if neither party can afford it pending divorce, and even decisions on which realtor should be used or what the listing price should be and decisions on dropping the price. If reaching a private agreement on what to do with a marital residence, you should contemplate issues which may arise and set forth contingency plans. For example, you can spell out how all expenses of the home will be covered post-separation. You can dictate a timeline for buy-out of equity if one party is keeping the home. Commonly, a refinance is done to remove the other party’s name from the financial responsibility for the home and to access funds necessary for the buy-out. In the case of sale, you can specify at the outset how a realtor will be chosen, what range is acceptable for the asking price, under what circumstances reductions will be made to the listing price if the home has not sold within a certain time frame. It is also useful to explain how parties will be compensated, if at all, for any pricey expenses/repairs above the costs of regular maintenance to ensure the home will sell. Lastly, you want to spell out how the proceeds will be split.