One of the biggest concerns couples face when going through a divorce in New Jersey is what will happen to their family home. For many married couples, their house is their largest financial asset. It is also where they raised their children, built memories, and established their lives together. As a result, deciding who gets to keep the house or whether it must be sold can become one of the most difficult parts of a divorce.
If you are considering divorce or are already going through the process, you may be asking: Can I keep the house? Does my spouse automatically get half? Can the court force us to sell the property? What happens to the mortgage?
The good news is that New Jersey law provides several ways to address the marital home during divorce. Understanding your rights and options can help you make informed decisions about your financial future.
How Is the Marital Home Divided in a New Jersey Divorce?
New Jersey follows a legal principle known as equitable distribution when dividing marital property during a divorce. Equitable distribution means that marital assets are divided fairly based on the circumstances of the marriage. It does not necessarily mean that everything is divided equally or that each spouse automatically receives 50% of the home's value. It is important to understand that the goal is fairness, not necessarily a strict 50/50 division.
Generally, there are three common options for handling the marital home.
- One Spouse Buys Out the Other Spouse
One of the most common arrangements is for one spouse to keep the marital home and buy out the other spouse's interest. For example, suppose a couple owns a home worth $600,000 and has an outstanding mortgage balance of $200,000. The home has approximately $400,000 in equity ($600,000-$200,000=$400,000).
If the parties cannot agree upon the value of a home, they can agree to have the home appraised. An appraisal provides an independent estimate of what the property is worth in the current real estate market.
If the parties agree to an equal division of the equity, each spouse would receive $200,000. If one spouse wants to keep the house, that spouse may need to pay the other spouse $200,000 in exchange for their interest in the property. The spouse keeping the home may accomplish this through refinancing, available cash, or an agreed offset involving other marital assets.
- Selling the House and Dividing the Proceeds
Another common option is to sell the marital home and divide the remaining proceeds between the spouses. After paying the mortgage, real estate commissions, closing costs, and other applicable expenses, the remaining proceeds are distributed according to the divorce agreement or court order.
- Delaying the Sale of the House
In certain circumstances, divorcing couples may agree to postpone selling the marital home. This arrangement is sometimes called a deferred sale or deferred distribution. For example, if the couple has children, they may agree that the parent with whom the children primarily reside can remain in the home until the youngest child graduates from high school. The house would then be sold at a later date, and the proceeds would be distributed according to the divorce agreement.
However, the agreement should clearly address who is responsible for mortgage payments, property taxes, insurance, repairs, and other household expenses while the property remains jointly owned.
Your marital home is likely one of your most valuable assets, and decisions about the property can have long-term financial consequences. The experienced attorneys at Cohn Lifland can help evaluate your circumstances, negotiate a fair property settlement, and protect your financial interests throughout the divorce process.