THE BLOG
02/20/2013 12:10 pm ET | Updated Apr 22, 2013

Keeping The House After Divorce

Often, one of the first questions I get from a prospective client looking at a divorce is if he or she should keep the house. As with all things related to a divorce, the answer is "it depends." Lots of different things should go into the decision making process when you are thinking about keeping the house. Most of those things can be broken into two categories -- the emotional component and the financial. As a divorce lawyer, I am trained to acknowledge and be sensitive to the emotional component, but provide advice that is free of the emotional issues -- or at least isn't completely driven by the emotional component.

Should you keep the house? Well, let's talk about the house. How big is it? What is the debt on the house? Can you afford to make the monthly mortgage payments? If you keep the house, and something breaks -- something big -- can you afford to make the repairs? Are you up for the maintenance? Will you be able to refinance the indebtedness and put it into your own name, as your spouse will almost certainly expect you to do in fairly short order? These are the kinds of things that I have to ask before I can provide an answer or advice.

I find myself pointing out the obvious: that we are not in the same economic climate that we were in five years ago and that refinancing isn't as easy as it used to be. For example, if you are a woman whose livelihood is going to be made up mostly of alimony and child support, you may not be someone to whom a bank is comfortable offering a loan. Even if you could afford it, will you be able to refinance into your individual name? In other words, will you be able to get a bank to lend you money?

Next, is there enough cash available in the marital estate to buy your spouse out of the house? Or if there's not enough cash, should you trade another asset, like a retirement account or a brokerage account, for the equity in the house? Is that a wise investment? There are plenty of people who got divorced in 2005 and 2006 who retained a house with equity at the time of the divorce in exchange for less from a retirement account or a brokerage account, thinking that they were getting the same thing, only to learn when the economy crashed that they were now upside down in their house, with no brokerage account or 401(k).

When there is a deficiency in what the house is worth versus what is owed, the decision of whether to keep the house may come down to which spouse has the income to make the monthly mortgage payments. If neither party can afford to take a financial loss and sell the house for less than what is owed, at least one of the parties could continue to live in it -- assuming he or she can afford the mortgage payments and upkeep -- and ride out the economy until the housing market improves.

All of this is not to say that I don't, from time to time, advise people to keep the house. If you want the house, you can afford the house, and there are enough other assets to make sure that there is still an ability to divide the marital estate so that everybody walks away with something, then let's get you that house! But there is no universal right answer, regardless of who planted the tree in the backyard, how many lines are drawn in the kitchen doorway to mark your children's growth, and where you taught your son to ride a bike. Keeping the house is a major financial decision, just like buying it probably was. All the factors should be considered, including our economy and its impact on the real estate market.

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