Wondering if you should buy a house before you are divorced? Below are commonly asked questions we hear when clients want to buy real estate during divorce as well as how to pay household bills when you a getting a divorce.
How do we figure out the equity or value of the house?
To value the new house, we list the fair market value of the asset (i.e., purchase price) minus the mortgage, and what remains is the equity that can be divided. (Generally, when dealing with a new purchase, housing prices are usually stable enough that the down payment is the same as the equity for about the first year.)
What happens if the down payment for the house comes from a joint account?
If the down payment comes from a joint community account, then the down payment will be reflected in the equity. The person keeping the house will get the equity value in his or her column of the spreadsheet we use to divide the marital estate. The down payment will not be a separate line item. The down payment shifted from a cash state to a house equity state but the value of it probably has not changed (unless there is some wild swing in housing values). This change in states can affect what you get out of the division of the estate.
For example, if your husband buys a house with fair market value of $600k, and he takes $120k cash from a bank account for the down payment, then the equity is $120k but it’s no longer liquid. You would have to sell the house to get the cash back. If that $120k was all the cash you had, then you may need to look at other options to get your share of the equity, like retirement or post-divorce monthly payments. If you have other sources of cash or are okay with the other options, then you may be fine with him taking the $120k and moving out of the house and into his own place just so you can get peace.
How will bills be paid if one of us moves out while the divorce is pending?
You will have two households, and the community estate will be paying for two households. Income earned during the marriage is community property. Your husband may expect you to get a job and cover your bills. But regardless, since both of your income is community property, the bills while you are married will be paid from this community asset.
Can I make him pay bills from separate property?
If one of you has separate property, you can’t force each other to use your separate estate to pay the marital community bills. The court does not have the authority to divide the separate estate or force someone to use their separate estate on community obligations. In sum, a second household will deplete the community estate and make the overall assets available for division smaller.
Every divorce situation is different, and there may be reasons why these options are not always the best way to proceed. It’s best to speak with an attorney about your situation before making any decisions about whether to buy a house during divorce.
Alexandra Geczi PLLC offers divorce for women by women. Alexandra Geczi has been rated as one of the best divorce lawyers in Dallas, and our female divorce lawyers are here to help you let go of a bad marriage so you can get your shine back. Contact us today to get started.