The first part of our series on who gets the house in a North Carolina divorce focused on laying the groundwork with a broad discussion of how property in general is divided. In Part 2 we dig deeper into specific examples that are common to many homeowners going through a divorce.
When One Spouse Owned the House First
Let’s consider the hypothetical–but very common in the real world–case of spouses moving into a home that one of them has already owned for a few years. On the surface it will appear to be separate property, but there are factors that could change that.
Home Renovations & Property Value Changes
A big example is improvements that were made to the house after the wedding. Say, for example, you and your spouse decided to refinish the basement and turn it into a suitable area for a rec room or additional living quarters. If this was financed with your shared money, that money is likely marital property.
It doesn’t matter if you were making more money than your spouse at the time of the home reno work. Money earned after the wedding is marital property. In this scenario, the renovations would have increased the value of the home, which could make the renovated portion of house marital property as well.
The courts will have to determine the current value of the home to decide what portion is separate property and what portion is shared marital property. Please note though, that this is more complex than simply looking at the property value at the time of the marriage and then again at the time of divorce. Property value appreciation that happens because of the passage of time will not become common marital property because it did not require the investment of marital property to make it possible.
An expert can determine how much of the home’s current value is due to investments made with marital money. It will fall to your divorce lawyer to make sure all relevant facts are known when the valuation takes place and that your case is presented as favorably as the facts will allow.
The Impact of Refinancing
Perhaps it wasn’t major home renovations that caused a debate over whether the house is still separate property. The marital home might be considered marital property because of something as seemingly harmless as mortgage refinancing.
Say, for example, you and your spouse decided to capitalize on low interest rates and did a home refi. Times were good in your marriage, so you thought nothing of it when the new mortgage was issued in both your names. Only now, there’s a legal document saying your soon-to-be ex is a co-owner of the house.
The judge will have to decide how much weight to give to the refinancing document in classifying the property. A valuation expert will again have to decide how much of the home’s value came after the refinancing occurred.
When a home’s value becomes marital property in any portion, it is possible that selling the house and sharing the money appropriately will be the easiest solution. This can be discussed in negotiations with your spouse, or a judge can order the division if they consider it the only way to reach an equitable settlement.
When Spouses Buy a Home Together
If you and your spouse purchased the home after your marriage, this is a clear-cut case of marital property. That’s the simple part. The more complicated part comes in considering what this should mean in light of other factors in the settlement.
Let’s say you and your spouse had children together. If they are still living at home and custody arrangements still must be made, this could impact who gets to keep the family home.
The best interest of the child is always the overriding factor in any child custody decisions by the state of North Carolina. It’s not hard to envision a judge deciding that the best interests of the children involve them staying in their familiar family house.
Let’s say you and your spouse are both okay with keeping the children in the family home so your kids can have some stability during what’s likely a very hard time for all of you. That also means who gets the house is now inextricably bound to who gets child custody.
It’s also worth pointing out that this same situation could become a difficult variable even if the house was owned by you or your spouse prior to marriage. In either case, it underscores the importance of proper valuation of the home for determining the rest of the settlement.
Why Property Valuation Is Important in a Divorce Settlement
Determining who gets the house in a divorce can be a gut-wrenching issue, and it may leave you with a tendency to view things in black-and-white terms–one person wins, and one person loses. It’s understandable and human for someone in a divorce to feel that way. However, it’s the professional responsibility of your divorce lawyer to keep the big picture of equitable distribution in mind.
Even if a decision has already been reached about who gets the house, the rest of the settlement must still be equitable. Unless proven otherwise, equitable will likely amount to a 50/50 division of the property. The value of the house is vitally important because determining how much of that value is separate property and what portion is marital property will have a ripple effect across your settlement.
Let’s say you get the short end of the stick with home valuation–meaning that if you got the house, it was valued too high and if you didn’t, it was valued too low. That may cost you when your other assets–stocks, retirement accounts, etc., are divided up.
Protect Your Property in a Divorce
You need strong representation that can fight for your interests in every detail of the divorce. That doesn’t mean burning bridges unnecessarily with your ex, but it does mean working with a legal advocate with a precise attention to detail who has your best interest at heart. We want to do what’s best for you by creating a case that brings all key factors before the judge or into mediation so your perspective receives appropriate consideration.
Rech Law, P.C. knows that legal tenacity should come with a thorough understanding of our clients and what’s most important to them. That’s why we take time to listen to each and every one of our clients, so we can fight for what matters most in your life. Call us today at (704) 659-0007 or contact us online. Let’s set up a consultation so we can get to know you and your case a little better.
Want to learn more about what happens to the home in a divorce?
Read Who Gets the House in a Divorce in North Carolina? Pt. 1 here.