When couples go through a divorce in Morris County or anywhere in New Jersey, it requires them to separate their lives from one another, including their finances and shared assets. One of the most important questions couples filing for divorce have regarding this process is what will happen to their family home during a New Jersey divorce. Often, houses are considered to be marital property in a divorce and are therefore subject to equitable distribution. This means that the property is divided fairly, but not necessarily equally, between the two spouses. Additionally, depending on the circumstances, spouses may sell the home, buy one spouse out, or continue as co-owners for a period of time. These situations can be complex, which is why it is important to have an experienced divorce attorney on your side.
Understanding What Happens to a House During a New Jersey Divorce
In New Jersey, the shared marital home is not automatically divided evenly between the spouses during a divorce, as most homes purchased during a marriage are considered marital property. Instead, courts in New Jersey adhere to the equitable distribution method. This means property is divided fairly based on the circumstances of the marriage. Factors like when the home was purchased, whose name is on the deed, whether each spouse contributed to the property, and if children are involved, can impact the outcome.
Additionally, depending on the outcome, the couple may choose to sell the home and split the proceeds, refinance and purchase the other spouse’s share, or continue as co-owners for a period of time after the divorce is finalized.
This issue is not uncommon, especially in high-value New Jersey real estate markets throughout Morris County, Essex County, and Bergen County, where home equity may make up a large portion of the couple’s assets.
Who Gets the House in a New Jersey Divorce?
- A home purchased during a marriage is generally deemed marital property in New Jersey
- Marital homes are generally subject to equitable distribution during a divorce
- Equitable distribution involves the fair division of assets rather than an equal division
- A judge may consider:
- The custody arrangement
- Each spouse’s financial contributions
- Mortgage obligations
- The length of the marriage
- Future financial stability
- Common outcomes include:
- Selling the home and dividing the proceeds in accordance with the equitable distribution statute
- One spouse purchasing the other’s share of the home
- Temporary co-ownership after divorce
When Is a House Considered Marital Property?
Marital property is assets that are bought or acquired throughout the duration of a marriage. This means that if a couple purchases a home once they are married, it is considered marital property and subject to equitable distribution.
If a spouse owned the house before the marriage and did not put the other spouse’s name on the title, then it is considered to be separate property. Therefore, it would not be subject to equitable distribution.
Situations That Can Complicate Property Classification
- One spouse purchased the home before the marriage, but joint funds were used to pay the mortgage
- Home renovations were jointly funded during the marriage
- Both spouses contributed to the maintenance and improvements of the property
- One spouse inherited the property
- The house was used, in part, for business purposes
- The couple signed a valid prenuptial or postnuptial agreement
How Is a House Distributed Equitably in a New Jersey Divorce?
Property that is considered marital is subject to equitable distribution in a divorce. When facing this situation, there are three ways to equitably distribute a family home, depending on their financial circumstances and the unique needs of their family.
Selling the House
This is the easiest option, as most spouses cannot afford to buy out the other and keep up with the costs related to the home.
The proceeds of the house can be divided equally or unequally to compensate a spouse for giving up another asset.
Important Considerations When Selling a Home During a Divorce
- Determining the home’s fair market value
- Deciding how to handle the cost of repairs and stagings
- Considering capital gains tax implications
- Paying off the current mortgage
- Establishing temporary residences
Arranging a Buyout
One spouse can buy out the other spouse’s equity. Usually, in these situations, the buying spouse will arrange to refinance the loan, the selling spouse will receive their share of the equity, and the loan will be in the buying spouse’s name alone.
Financial Issues Often Involved in a Buyout
- Mortgage refinancing approval requirements
- Credit score considerations
- Appraisal disputes
- Cash-out refinancing
- Debt-to-income ratios
- Responsibility for future repairs and upkeep
Continuing to Co-Own the House
This option is common when the couple has children who will benefit from remaining in the same home and school district.
When this happens, one spouse usually moves out and waits for a period of time before the house is sold.
Situations Where Temporary Co-Ownership May Work
- Parents wish to minimize potential disruptions for the child’
- The housing market is unfavorable for sellers
- One spouse needs extra time to refinance
- The couple can agree on shared financial responsibilities for the home
Factors New Jersey Courts May Consider When Dividing a Home
New Jersey courts often consider a number of factors when determining how to divide marital assets during a divorce, including a family home.
Factors Courts Often Consider
- The length of the marriage
- The income and earning capacity of each spouse
- The current child custody arrangement
- Each spouse’s financial and domestic contributions
- The standard of living established during the marriage
- Tax consequences of property division
- Existing debts and liabilities
While every divorce is different, New Jersey courts generally focus on achieving a fair distribution of marital property rather than automatically awarding the home to one spouse. As such, the outcome ultimately depends on the financial circumstances, parenting responsibility, and practicality of maintaining the property after a Morris County divorce.
Contact Our Morris County Family Law Firm Today
Going through a divorce is an incredibly overwhelming and complex matter. However, these matters can be made even more stressful when your house is on the line. As such, if you need an experienced legal team to guide you through your divorce, contact Townsend, Tomaio, Newmark & Clancy L.L.C today.
