Who Keeps The House?


In Idaho, who keeps the house after a divorce?

In Idaho, the division of property in a divorce follows the principle of equitable distribution. This means that the court aims to divide the marital property in a fair and just manner, taking into consideration various factors, rather than a strict 50/50 split.

When it comes to the marital home, there are typically two possible scenarios:

  1. Sell the home: In some cases, the parties sell the marital home and divide the proceeds between themselves. This option is often chosen if neither spouse wishes to keep the house or if it is the most practical solution.
  2. One party keeps the home and buys the other party out: One spouse may choose to buy out the other spouse’s share of the home. This typically involves compensating the other spouse for their share of the home’s equity, allowing one spouse to retain ownership.

Sometimes one party will want to sell the home and the other party will want to remain in the house and the party that wants to sell will want to force the other party to sell the house. The court doesn’t really care who keeps the house, as long as both parties receive a fair and equitable share of the home’s equity. This means that if one party wants to remain in the house and they are able to buy the other person out, the court will let them do so. One person can’t stop the other person from remaining in the house after the divorce if the other party has the ability to buy them out.

How is the buyout determined at the time of divorce?

The buyout of real property is determined by determining the value of the house, subtracting the mortgage associated with the real property, and dividing the remaining balance in half.

As an example, Fred and Wilma own a $400,000 Bedrock home. They owe $200,000 on the house. Fred wishes to remain in the house. Fred would need to pay Wilma $100,000 for her share of the equity to be able to do so.  ($400,000 – $200,000 = $200,000. $200,000/2 = $100,000)

Keep in mind that the final amount awarded to each party should be equal, every piece of property doesn’t have to be split equally. Assume Wilma has a $200,000 401(k) account from her job. Fred has no other assets outside of the home. If the 401(k) was earned during the marriage, it would likely be community property and subject to division at the time of divorce. This means each party would be entitled to half of the account, $100,000.

Based on the example above, Fred owes Wilma $100,000 for her share of the equity and Wilma owes Fred $100,000 for his share of the 401(k). Each party should leave the marriage with $200,000 of property or equity. This means that Fred could keep the house without buying Wilma out and Wilma could keep her entire 401(k) account without having to share any of it with Fred. Each party is taking half of the community property, not one-half of each property individually. 

A lot of times a party might want to stay in the house. Or they might want to keep their retirement account intact for the benefit of compounding interest. Most of the time, people can generally do one of these things but doing both is often a challenge without other accounts or property to consider. If you’re going through a divorce, it’s important to prioritize what you would like to leave the marriage with. 

Typically, the thing that determines which party, if either party, can keep the house comes down to the practicality of that person making the monthly mortgage payment. If both names are on a mortgage and the parties are getting divorced, the party remaining in the home will typically need to refinance the loan in their own name. This means getting a new loan based on that person’s credit and work history. 

In the example above, Fred might think, “I can afford the $1,500 monthly payment, I’ll just take over the payments.” However, he would need to get a new loan, which would be subject to current interest rates. He may or may not qualify for a new loan on his own.

In addition, Fred may not be able to make the payment without Wilma’s contributions. Or if the house is the only community property, Fred would likely need to finance $300,000 against the house in order to give Wilma $100,000 for her share of the home’s equity. Maybe he could make the $1,500 payment for the house’s current mortgage, but he may not be able to make the new $2,000 payment. 

In this case, selling the house may not be his preferred option, but it might be the only real option he has. 

Sometimes people will need a little bit of time to refinance the house in order to get a more favorable interest rate or to reduce the amount owed so that they can qualify for a smaller mortgage when they refinance. This is generally allowed, as long as it’s a temporary situation, and both parties agree. 

Sometimes a couple may also agree to wait a short period of time to sell the house so that one parent can continue to raise the children in the house so that the kids don’t have to move schools or to a new area. Again, this is generally allowed when both parties are in agreement but is more likely to be approved by the court when the child is in high school than if he or she were in third grade.

Contact Taylor Law & Mediation PLLC if you have questions regarding what to do with your house at the time of divorce. The above is presented for educational purposes only and should not be construed as legal advice. Every situation is different and it is hard to account for all situations in a blog.

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