Do I Have To Sell My House in a Divorce in Arizona?

“Do I have to sell my house in a divorce?” is a question people often ask when preparing to dissolve their marriage. Even a straightforward collaborative divorce is a major upheaval, and the thought of leaving your family home can be overwhelming. 

If you consult divorce lawyers in Phoenix, you’ll find out that you may sell your house beforehand, wait until after the divorce to sell the house, or “buy out” your spouse’s share and keep the house. Let’s discuss each of these options. 

Who Owns Your Home?

Arizona is a community property state, which means marital assets are split approximately 50-50 during property division. We discuss a typical situation in which the family home is a marital asset, meaning it was acquired jointly by both spouses during the marriage. 

If you or your spouse own the house before marriage, it usually counts as separate property. However, the non-owner spouse may still be entitled to a portion of the home’s equity, depending on their contributions to improving the asset. 

Should You Fight To Keep the House?

The psychological impact of divorce can be earth-shattering, especially for young children. Many people will fight hard to keep the family home to give themselves and their children some stability. You may also want to hold on to your home because of all the memories attached to it. But should you do that?

The answer to “Do I have to sell my house in a divorce?” is “Not necessarily, but it may be the more rational choice.”

Ask yourself:

• Can I still afford to pay home maintenance, taxes, insurance, utilities, and other ongoing expenses with my post-divorce income?
• Is there still a mortgage on the house? Can I afford to pay it off alone?
• How soon would my children move out?
• Do I really want to keep living in this house and this area?

After looking at the big picture, you might decide that selling the family home and starting afresh in a new place is the more sensible choice for you.

Selling the House Before the Divorce

When the spouses agree, selling real estate in divorce can take place before divorce. If you and your spouse can easily find other living arrangements, and neither of you is interested in keeping the family home, you can sell your house as soon as you decide to separate. 

In this case, the proceeds from your home’s sale will usually go into a designated trust account. You would then agree on how to split the proceeds while negotiating a divorce settlement.

The Benefits of Selling the Family Home Before Divorce

Selling your jointly owned home before divorce can be a good idea for many reasons. For instance:

• You’ll have more time to look for an eligible buyer if you put your house on the market before divorce
• If you expect the housing prices in your area to go down, selling your home sooner could allow you to negotiate a better deal 
• Selling your house early leaves you with one thing less to consider when negotiating a divorce settlement
• Selling the family home may give each of you the cash you need to start a new life

The Drawbacks of Selling Before Divorce

On the other hand, when you decide to sell your home before a settlement agreement, you must rely on your spouse’s cooperation. Emotions run high during divorce, and if you have unresolved conflicts, your spouse may back out of selling the house even if you already have a potential buyer. 

Ultimately, the decision of whether and when to sell the family home is a personal one that often depends on the relationship dynamics between you and your former spouse.

Selling the House After the Divorce

You could also wait until after the divorce to sell your family home. This course of action may make it easier to split marital property equally between spouses. 

When you and your spouse divide assets — for instance, one side keeps the vehicle while the other retains the vacation home — it can be difficult to ensure both of you receive equal shares of the marital property. To balance this out, the spouse with the larger equity typically makes an equalization payment to the other spouse.

If the spouse who has to make the equalization payment doesn’t have enough cash, the two sides may need to agree on a payment plan. Payments could drag out, and disputes could arise down the road.

When selling your house after a divorce, you can use the proceeds to balance out any difference in equity and settle your property division at once. 

“Buying Out” Your Spouse’s Share

If, upon consideration, you decide staying in the family home is the right choice for you, you may be able to negotiate a spousal agreement that leaves the house in your hands after divorce.

This may mean giving up other marital assets, like a savings account or a jointly owned business, in exchange for keeping the house. Alternatively, you may pay out your ex-spouse’s share of the home’s equity over time. You’d also take charge of the mortgage and other expenses, like property taxes.

Reaching a solution that suits everybody is easier when you and your soon-to-be-ex-spouse are ready to cooperate. You should also consult an experienced divorce attorney to ensure your divorce settlement is fair and equitable. 

Are You Preparing for Divorce? Call Lincoln & Wenk

It can be hard to imagine how divorce may benefit you when dealing with the turmoil of separation, but your new life is waiting on the other side.

Our team at Lincoln & Wenk is here to help you navigate Arizona divorce laws, protect your interests while negotiating a divorce settlement, and answer all your questions, from “Do I have to sell my house in a divorce?” to “How do we work out custody arrangements for the holidays?”

Call (623) 201-8849 or contact us online to schedule a consultation.