According to many divorce law firms, a challenging issue that many divorcing spouses must go through is the division of their marital property, which many times includes a house.
In cases where one spouse wishes to remain in the family home, divorce attorneys must guide their clients through the process of a house buyout so that each spouse is able to walk away with the assets they are entitled to.
Divorce lawyers explain that a house buyout is an option that can work in lieu of selling the house outright, as long as the spouse keeping the home can reimburse the other spouse for their share of the investment that has already been made.
How Are House Buyouts Done?
First, divorce lawyers will help their clients find an experienced real estate professional who can provide an accurate assessment of the current value of the house.
The house must be professionally appraised so that a reasonable market value can then be assigned and provided to the representing divorce law firms.
Equity In The Home Must Be Calculated
Once the value of the home is determined, the amount of equity that the couple has in the home can be calculated.
According to divorce attorneys, equity is the difference between the stated value of the home and the balance due on the mortgage.
The higher the value of the home, the more equity is held by its owners.
Divorce lawyers advise that this can also work in reverse, however, on the rare occasion that the property value has gone down.
Equity Is Then Divided Based on State Law
The amount of equity that is held in the home must then be divided with the help of each divorce law firm according to how each state handles marital property.
Since Texas is a community property state, the equity would normally be split 50/50 between the spouses, unless there is some reason why one spouse is deserving of a higher amount of the equity than the other.
Divorce attorneys advise that the amount of equity assigned to the selling spouse is the amount that the buying spouse must then pay to them to buy out their interest in the marital home.
One Spouse Buys Out The Equity of the Other Spouse
Divorce lawyers advise their clients that the final step to a divorce buyout is for the spouse buying out their ex’s interest to pay them for it.
The easiest way to do that is for the buying spouse to simply pay cash via the representing law firms to their selling spouse if the funds are available.
Other options include creating a buyout agreement that allows one spouse to make payments to the other if the buying spouse can afford the additional payment.
A third option according to divorce attorneys is to refinance the home to provide a cash payout to the selling spouse, with the new monthly mortgage payment reflecting that.
If none of these options work, the court can demand that the house simply be sold, with each spouse retaining their share of the equity.
Adding Up The Facts
When a divorce involves the splitting of a family home, a divorce buyout is possible should one spouse decide they want to keep the house.
Work with a divorce law firm experienced in the home buyout process to ensure the best results.