When a married couple divorces, one of the most important parts of the process is the division of property. For many couples, the marital home is both the largest asset and the most important one to divide.
If you’re facing a divorce or considering getting divorced, you need to know how the division of your property will play out. New Jersey’s laws concerning the division of property can be complex and confusing. The right legal representation will help you protect your rights and help find a solution to start your future on the right foot.
First, the court must determine whether the house is separate property or marital property
In essence, “separate property” is property that is owned by an individual spouse, or acquired prior to the marriage, whereas “marital property” is owned by both spouses and acquired during the marriage and is thus subject to property division. The court’s determination of marital property has less to do with whose name is on the property and more to do with when and how the property was acquired.
In general, if you built or bought a home during your marriage – that is, between the day you were married and the day the divorce is finalized – then it’s marital property subject to division. That’s true even if only one spouse’s name is on the deed or the mortgage, and even if only one spouse’s money was used to purchase the house. In addition, if you bought or built the house together before you were married, it can be considered marital property.
If the house was purchased by one spouse before the marriage or received by one spouse as a gift or inheritance from a third party, it may be considered separate property and thus not subject to division in the divorce proceedings. However, to remain separate property, it must be kept separate and not co-mingled with any of the other spouse’s property. If the other spouse contributed to the value of the home – for example, by paying the mortgage, paying for maintenance and improvements, or even contributing in non-financial ways like providing childcare or household chores – then the court may consider the home, or at least some of the equity in the home, to be marital property.
In addition, a house that would otherwise be considered marital property may be considered separate if a valid and enforceable prenuptial or postnuptial agreement designates it as such.
The court makes the same determination for other property, such as vehicles, investments, retirement accounts, and so on. The next step is for the court to assess the value of the marital property, which may require hiring experts such as appraisers, and then determine how to divide it.
New Jersey is an “equitable distribution” state
That means New Jersey family courts distribute marital property in a manner that is fair, but not necessarily equal. In other words, the court is under no obligation to split your marital property 50/50; it all comes down to what the court believes is fair.
Some of the factors a New Jersey court can take into account are:
- The duration of the marriage
- The age and health of each spouse
- The income and property each spouse brought to the marriage
- The standard of living during the marriage
- The economic circumstances of each spouse at the time of the divorce
- The income and earning capacity of each spouse
- The contributions each spouse made to the property
- The debts and liabilities of each spouse
- Child custody and economic needs of the children
In part, the law works this way to acknowledge that marriage is a partnership and many contributions to that partnership have economic value even if they didn’t add directly to the couple’s earnings. For example, if one spouse delayed their education, left their job to care for the children, or turned down a career opportunity to support the other spouse, the court can take that into account in the division of property.
If you’re able to come to an agreement with the other party to divide your home and other property, then those terms will be incorporated into your agreement and final judgment of divorce. If you can’t agree, the court will decide on the terms of equitable distribution.
How can a home be divided?
Of course, a house can’t just be cut in half and divided between the spouses. Generally, there are three ways to divide and distribute the marital home:
- Sell the house and split the proceeds. As part of the broader division of property, the proceeds from the sale may be evenly split, or they may be unequally split to offset another part of the property division. In some cases, this is the only viable option because neither spouse can afford to buy out the other or maintain the home.
- One spouse buys out the other. Ownership of the home goes to one spouse who “buys out” the other spouse’s equity. There are costs associated with a buyout, and if the home isn’t owned outright, the mortgage may have to be refinanced. Part of the divorce agreement is deciding who will pay the costs associated with the buyout.
- Maintain the status quo. The spouses maintain joint ownership of the house for some time. Often, this can be tied to a child graduating high school if they are already in high school. One spouse may stay in the home while the other moves out, or both spouses may take turns staying in the home while also maintaining separate residences. This can be a viable option if you have the financial flexibility and a good working relationship with the other party, but it’s logistically challenging and often expensive.
What happens to the mortgage?
Generally, if one spouse keeps the house, they are responsible for paying the mortgage as well. What you must remember with respect to mortgages in divorce (and joint debts more generally) is that the divorce decree affects the divorcing spouses, not their creditors. If the judge declares that one spouse is responsible for paying the mortgage, but both spouses’ names are on the mortgage itself, then as far as the lender is concerned, they’re both still responsible. If your former spouse falls behind on their payments, that can affect your credit score and you can still end up dealing with collection action, even if the divorce says your former spouse is the only one responsible.
The best option is to refinance the mortgage so that the loan itself is only in the name of the spouse responsible for paying it. Some lenders may be willing to remove a name from an existing loan, but usually, you need to get a new loan. The sooner that’s done, the better; you don’t want your finances to remain entangled with your former spouse any longer than necessary.
Can you sell the house before the divorce is finalized?
Sometimes. If the home is facing foreclosure or the family can’t meet the monthly mortgage payments, the parties can agree or the court can order it sold. It’s best to have a lawyer on your side to make such a motion to the court on your behalf if necessary.
An attorney can help you navigate the process
Even if your divorce is amicable, division of the marital home is a complex process, and you need someone on your side who understands the long-term implications. An experienced divorce attorney can represent your interests in negotiations and help you reach an agreement. Of course, if your divorce is more contentious, it’s critical that you have experienced legal counsel to make sure you have a place to live, a fair share of the marital property, and a solid foundation for your future.
This is a difficult journey, but you don’t have to walk it alone. If you have questions about the division of property or are considering divorce, experienced New Jersey divorce and family law attorney in your area.
