Selling a House Due to a Divorce

A divorce requires property division, but this process can introduce a lot of conflict into an already volatile situation. They have to determine who owns what to tell the court what is marital property and what is separate property.

A family home can be marital or separate property in Tennessee. It depends on things like:

  • Whose name is on the deed
  • When you purchased the house
  • Where you lived during the marriage
  • How long the marriage lasted

Read on to find out what happens regarding the sale of the house when you get a divorce in Tennessee.

who gets the house in a divorce in Tennessee

Who Gets the House in a Divorce in Tennessee?

There’s no clear answer to who gets the house in a Tennessee divorce. The state doesn’t abide by community property laws, which require an equal division of assets. Instead, Tennessee follows standard law property guidelines, leading to an equitable split in a divorce.

Common law property means ownership lies with whoever’s name on the title. If you buy a house with your spouse and put both names as homeowners, it’s marital property, and you have to divide it during the divorce. 

There are many ways to divide the house, but one of the easiest options is selling it to pay off the remaining mortgage and split any remaining cash. Of course, it can take time unless you consider selling your house online in TN. It ties things up quickly and neatly to reduce stress during an already challenging time. If you’re interested in a clean, easy cash sale, we buy houses Tennessee couples need to sell to tie up their divorce.

In some cases, your spouse living in your house gives them partial ownership even if your name is on the deed. They’ve moved in and lived there like it’s their house, too, so the courts will consider this, along with the duration of the marriage, during the divorce. If the spouse helped pay for maintenance, renovations, or mortgage payments, they may have a stake in the value.

Is It a Marital or Separate Property

Determining if the house is a marital or separate property depends on when the couple bought it. Anything acquired during the marriage is automatically marital property. The name on the sale title or property record doesn’t matter at all—only when they purchased it.

Separate property includes everything brought into the marriage. This category includes cars, bank accounts, and inheritances. Each spouse can keep their separate properties, but this might impact their divorce. Tennessee divides marital property in a divorce. 

The court assesses the separate property of each spouse. If you have more separate property than your partner, the court might grant them more marital property to keep things equitable.

Separate property can become marital property in some cases. If one spouse owns a condo that they rent out during the marriage, that rental income is marital property, even though the condo belongs solely to the spouse. The court will see records of this rent and consider it as marital property to divide between the couple.

If one spouse owns a house and their married partner moves in with them and lives there for the duration of the marriage, the house could become marital property. Both partners treat the dwelling like their marital home, becoming community property. It’s also possible for separate property to become marital property due to usage.

Though Tennessee divides marital property, that doesn’t mean the division is always half and half. Instead, the courts decide how to divide things equitably. That might mean they award the entire house to one spouse and give the other something with a similar value, depending on the circumstances.

When dividing marital property, the courts consider several major factors:

  • Duration of marriage
  • Age, overall health, financial needs, and earning capacity of each person
  • Contributions made to the other spouse’s education, training, and earning potential
  • Ability to gain more assets and earn income in the future
  • Contributions of parties to the overall union and home
  • Value of each spouse’s separate property
  • What each spouse brought into the marriage

These factors also play into the economic circumstances of the spouses at the time of the divorce. The tax implications also make a difference because one spouse could have to pay capital gains tax. The court can review other relevant information to make the right decisions about equity in a divorce.

Community Property States – Tennessee

A community property state requires an equal split of assets during a divorce. Getting a divorce when you live in a community property state can be good because there’s less to fight over. The court will divide all property and assets equally, no matter what.

In some cases, this division could be unfair. If you bring more into the marriage, you’ll lose half of it to your spouse if you don’t have a prenup. If you earned more throughout the marriage while your spouse held jobs below their earning power, you’ll have to give them half of what you made and saved.

Debts are also considered community property, so the court subtracts that amount from the total assets before division. Then the court divides the remaining assets equally. If you earned more than your spouse and racked up more debt, your payout from the divorce will still be less because you have to resolve the debt jointly.

However, community property tends to get restricted to assets and debt acquired during the marriage. If your partner has student debt from before the marriage, you won’t be responsible for that. Similarly, any inheritances received aren’t part of community property. So there’s some protection, but overall it’s not as equitable as a divorce could be.

If you live in a community property state, getting a prenup can eliminate a lot of the hassle. Since it’s a legally binding agreement signed before marriage, the court will uphold the prenup over the community property law.

Tennessee isn’t a community property state by default. However, if both partners agree, there’s an option to elect to divide things as community property. They can set up a Community Property Trust to include certain properties that they’ll divide equally in case of a divorce.

Most states, including Tennessee, are common law property states. This means the courts follow equitable distribution as outlined above. Any property belonging solely to one spouse will go back to that spouse in a divorce.

Information About Prenups

A prenuptial agreement is a contract that partners sign before they get married. They outline all the property each person owns separately. Debt is often included. Then they explain what the property rights will be during the marriage.

For example, you could own a house but agree with your spouse that you’ll both live there during the marriage. You can write this into the prenup and then qualify it by saying the house would still belong solely to you in case of divorce.

Prenups aren’t just for rich people who want to protect their assets or shield themselves from their spouse’s debts. Many people who already own property before marriage sign prenups. People with children from previous marriages often sign prenups to ensure the property intended for their children goes to them, not their spouse during a divorce.

A marital prenup is also a way to prevent arguments in the case of a divorce. You’ve already planned for what property belongs to whom, and you’ve both agreed to the contract. Therefore, during a divorce, there’s nothing to argue about. The court will stick to the division of assets from the prenup.

If you don’t have a prenup and your marriage ends in divorce, you have to split the property equitably. For partners with an amicable divorce, they may be able to talk it out on their own and agree to the terms. But couples arguing constantly will surely fight over the division of property, so a divorce attorney and the court will settle things for them.

Buying Out the Other Party

If the courts find that your house is marital property, you have a few options on how to handle things. You can choose one of three choices:

  • Sell the house
  • Buy out your spouse’s share
  • Remaining co-owners

There are pros and cons to each option. Selling the house is a big decision and can add stress to the divorce. You have to prepare the house, put it on the market, and find a new place to live. It can be difficult to find a new home if your finances are tied up in the divorce and house. 

On the other hand, if you sell the house and split the profits, both you and your spouse will have some money to help you start over after a divorce. There are also easier ways to sell the house without hassle, including the option to sell the house to cash home buyers. It can be nice to have a clean slate in a new home, without memories hanging around. 

Some people love their home, though, and want to keep it. This is especially true if you owned it before marriage and let your spouse move it. Having children also factors into the decision—you might want to keep the house for them so they’re not dealing with too many changes at once. 

Buying out your other party means you give them the cash equivalent of their stake in the house. You’ll have less of a financial gain from the divorce, but you get to keep the house. People choosing house buyouts need to switch the title to one name only. With mortgage buyouts, you might have to refinance the home.

In an amicable divorce, it might seem like a good idea to remain co-owners. You can do this while you wait to find new places to live or while saving money to buy out the other person. Or you can co-own the house for your children. You could even use it as a rental property and split that income.

However, if you have hard feelings towards your spouse, you probably want to cut ties entirely. The option of staying co-owners might not be the right choice in many cases.

Using a Lawyer When Buying Out Your Other Party

It’s ideal to find a good law firm and hire a lawyer when buying out your other party during a divorce. Property lawyers for divorced couples can help navigate this deal so both parties get what they want.

The spouse leaving the house might have hard feelings about the move. They have to find a new place to live and won’t have any stake in the future appreciation of the property. On the other hand, the spouse that buys the house could lose money if the property depreciates. They’ll also have to pay money over the years for taxes, maintenance, and mortgage payments.

Property lawyers can help you both understand the pros and cons of a house buyout. They can even implement a gradual buyout, where both houses keep interest in the house until completing the mortgage buyout.

Marital lawyers aren’t real estate agents, so they don’t know how much the house would sell for. Instead, they research to find the fair market value of the house. This figure could come from an appraisal or comps showing what similar houses recently sold for.

Selling Negotiation Advice

When you buy a house from a third party, you negotiate to get the best deal. You can do this when you’re selling a house during a divorce, too. Negotiations can vary depending on the value of the house and other situations. For example, if you were going to replace the roof together before the divorce, you could argue that the expense should come out of the buyout total.

If your divorce is calling for spousal support, that could come into negotiation as well. One spouse might agree to take pay more in the house buyout than to pay spousal support later.

You need to go through refinancing the house after divorce, which can also impact the buyout. The partner keeping the house goes to a lender and applies for a loan in their name. This loan will pay off the house’s original loan and pay the other spouse for the buyout.

For example, your marital house has a principal balance of $200,000. You have to pay your spouse $100,000 to buy them out. The loan you take out in your name should be at least $300,000 to pay the original loan and your spouse. At that point, you would be the sole owner. The process happens as a normal home sale and the deed transfers to your name.

Negotiations can change the amount of a loan you need for a mortgage buyout. You don’t have to give them cash at the buyout if there’s any property they want. Maybe you pay a fourth of the real estate market value and let them take the RV. Or they take the furniture they bought to customize the house and leave you with the structure itself.

house for sale in Tennessee due to divorce

Ways to Sell a Home in a Divorce

There are several ways to sell your marital home during a divorce in TN. The best selling advice is to have a written stipulation that becomes a court order during the divorce. You and your spouse agree on the details of selling the house. The stipulation can outline things like:

  • Realtor selection
  • How to price the property
  • When and how to reduce the list price, if needed
  • Who will handle the sale
  • Who will approve the offers
  • Who makes the house ready for showings
  • Who pays any selling fees, liens, or other expenses

It can help if you need the funds from the house sale to pay for the divorce lawyer, the court will grant an order to sell the house before or during the divorce. 

Many married couples wonder, “Can I be forced to sell my house in a divorce?” Yes, the court can force you to sell your house. This might happen for several different reasons. Most commonly, it’s because neither spouse wants to keep the house for themselves. The court forces them to sell it so the profits will become part of the divorce negotiation.

The court may force you to sell the house to your spouse if you owe them more in the divorce settlement than you have. For example, if you owe your spouse $100,000 to keep everything fair in the divorce, you can pay them that money if you have it. But if you don’t, you have to give them more in the divorce to make the total value of the property reach $100,000.

To get that value, you might have to sell your spouse your home equity. Instead of your partner needing to buy you out to put the house in their name only, you give up your stake in the house. As a result, your debts to your partner are paid, but you don’t have your name on the deed anymore.

If you need to sell your property fast and for a fair price, a cash home buyer is a good option. Of course, you want to work with a trusted name in the industry. While it might be tempting to post an ad in the paper that says “Buy My House Memphis” just to get under your spouse’s skin, that’s not going to help your case.

The good news is that your spouse can’t personally force you to sell the house. If the two of you can’t agree on who keeps the house, the court will intervene as part of the divorce proceedings and decide for you.

Conclusion

Getting a divorce in Tennessee means you have to assess all property and label it marital or separate. This division impacts how much you’ll get in the divorce. Since Tennessee isn’t a community property state, the division is equitable. You’ll be able to work with your spouse and the courts to see if you need to sell your house or buy out the other partner.

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