Alongi Law Firm, PLLC

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Handling a house buyout in a divorce

When divorcing couples enter into property division negotiations, the marital home is usually the most valuable asset discussed. The community property laws in Arizona require marital assets to be divided equally, which means establishing an agreed-upon value for the primary residence is extremely important. This is usually done by qualified real estate appraisers, but it is often a difficult process.

Appraisers usually inspect the home in question and then check recent transactions in the area to find out how much similar properties have sold for. Divorcing spouses often appoint an appraiser each, and a third appraisal may be required if their valuations are not in alignment. Once a property value has been agreed on, the spouses must decide whether or not to sell the marital home and divide the proceeds. If one spouse wishes to remain in the home, negotiations become more complex and potentially more contentious.

In these situations, the spouse who wishes to keep living in the house must either obtain the funds needed to buy other party out or offer them other marital assets in return for their share. These assets may include stocks, automobiles or artwork that could be as difficult to place a value on as real estate. Divorcing spouses who hope to offer cash to buy the marital home may find it difficult to secure financing as their credit applications will be evaluated based on their income alone.

Experienced family law attorneys may urge their clients to insist that all jointly held mortgages be paid off in during divorce proceedings. This is because lenders are not bound by the terms of a divorce settlement and will pursue any individual who signed loan documents if payments fall into arrears. Banks also report late payments and collection efforts to credit reporting companies.

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