Real Estate in Divorce in Ohio
The division of property in a dissolution or divorce should be fair and equitable. This is usually close to a 50%-50% division. This would include all items that have been acquired by the parties during the marriage. This is referred to as a division of the “marital property”.
Real estate which was acquired during the marriage is marital property and should be fairly divided in a divorce or dissolution of marriage. It does not matter that the real estate is deeded to only one spouse if it was acquired during the marriage. Exceptions to this can be that one party has brought into the marriage an asset which is used to purchase the property, or when the property is acquired after the separation of the parties and after the marriage for all practical purposes no longer existed.
Real estate which was acquired prior to the marriage is not marital property but the separate property of the spouse who brought it into the marriage. A possible exception to this can be when one spouse contributes to the improvement of the other’s property during the marriage, such as by investing in improvements to the property or by donating “sweat equity” (physical labor) to the property.
In making the division of real estate: What could the real estate be sold for? How much, if any, is the mortgage and second mortgage or any liens on it? It is the net value or equity of the property that is important.
Sale: If the property of the parties is being sold, the net proceeds or the net liability is usually split equally. This can vary if some adjustment must be made to equalize other assets or debts in the marriage (such as differences in retirement accounts, cars, debts which are being assumed etc.). Sometimes the common debts of the parties are paid out of the real estate proceeds before the parties split the net proceeds.
The agreement of the parties should specify what is going to happen until sale: who is going to live in the house, who is responsible for ordinary maintenance, who is responsible for any improvements which may be needed to make the property ready for sale, who is going to pay the utilities, and who is going to pay the mortgage and taxes (whether one party or split equally).
One Party Keeping Property: One spouse may be keeping the real property of the parties. If the property is presently deeded to both parties, a deed will have to be prepared conveying the interest of one party to the other. This is done either at the time of the divorce (in the case where the mortgage is already in the name of the party keeping the house) or at the time of the refinancing of the mortgage.
When the property has a mortgage which is in the name of both parties, refinancing of the mortgage will be required. This is because the spouse who is still on the mortgage will probably be unable to get another mortgage should they want to later buy their own house. It does not matter that the divorce decree has language as to who is responsible for the mortgage, both are still liable under the mortgage as far as any bank or financing company is concerned.
When the refinancing is required to be completed can vary, but the length of time must be agreed upon. It may be that the property presently has negative equity (is worth less than the mortgage balance) and can’t be refinanced in the near future, or that the parties may want to defer refinancing until all minor children are 18.
The deeding of the house from one spouse to the other is usually done by the bank or finance company at the time of refinancing.
When there is equity in real estate there may be an agreement that one spouse is buying out the other. The current market value minus the current mortgage balance gives the amount of equity in the property. The agreement of the parties should specify how one spouse is paying off the other—whether this is by a lump sum or by monthly payments, or if the sum is to be paid when the property is refinanced.
Disputes: If there is a dispute over the value of real estate, the parties may pay for an appraisal of the real estate.
The easiest way for a court to resolve a dispute over real estate is to order that the property be sold and the proceeds split. Especially in today’s difficult economy, where the values of real estate have fallen, this may hurt both parties.
If you and your spouse are in a contested dispute over real estate it is best to consult and retain an attorney.