When a married couple splits up, the house is often one of the major assets that is divided between them. Selling your house during divorce in North Carolina can be complicated and stressful for both parties involved. So, if you are going through a divorce and need to sell your home, it’s important to know how the process will work. Check out our in-depth guide to understand all available options making the process less stressful while navigating the sale of your house during divorce in North Carolina.
- North Carolina is an equitable distribution state meaning the proceeds from selling your house may not be split 50/50.
- The determination of marital versus separate property can conclude who gets the house in a North Carolina divorce.
- In North Carolina, a court can force the sale of the house in divorce but typically allows spouses to come to an agreement first.
- Alternatives to selling your house during divorce include buying out your spouse, co-owning, or splitting assets of equivalent value.
Table of Contents
1. How Does Selling A House During Divorce Work?
2. Who Gets the House in a Divorce in North Carolina?
3. Should I Sell Before or After Divorce?
4. Can a Court Make Your Sell House in Divorce?
5. Who Gets to Stay in the House During Divorce?
6. Alternatives to Selling a House During Divorce
How Does Selling A House During Divorce Work?
Selling your house during a divorce can be complicated, but getting yourself a divorce attorney to provide legal advice is a good place to start. You then need to determine who owns the real estate (i.e. is it marital property, separate property, or a combination?). Next, it’s time to figure out if you want to sell the house with a realtor, investor, or by owner in North Carolina and divide the proceeds from the sale.
Let’s explore the details of how to sell your house during divorce…
Step 1: Find a Divorce Attorney in NC
A divorce attorney is not required in a North Carolina divorce proceeding. However, it is advisable to hire a lawyer who practices family law for legal advice, as the divorce process can be complex. Each party will need a separate divorce attorney to avoid a conflict of interest.
Step 2: Determine who Owns the Real Estate
Determining who owns the real estate during divorce is necessary before selling in North Carolina, as this could determine whether the home is sold at all or how to split the proceeds from the home sale. North Carolina is one of more than forty states that divides property following a process called “equitable distribution,” which means the marital assets may not be split fifty-fifty.
Marital Property in North Carolina
The North Carolina Code section 50-20 defines marital property as all property acquired from the date of marriage to the date of separation (excluding inherited assets or gifts). Marital property could include the family home (titled in the name of both spouses), income, debt, etc. If the home was purchased after the date of marriage or jointly titled, it is marital property. This means after selling the marital residence, the proceeds will be split between spouses how the court deems most fair and equitable in North Carolina.
Separate Property in North Carolina
Separate property includes all property acquired by either spouse before the marriage. It also includes property acquired during the marriage by inheritance or by a gift from someone other than the spouse. If the home was owned outright before the date of marriage, that party gets to decide what to do with the home whether it’s continuing to live there or selling it (no proceeds of the home sale have to go to the spouse).
Divisible Property in North Carolina
Divisible property in NC includes all changes in value of marital property occurring after the date of separation and prior to the date of distribution. However, any appreciation or diminution that results from post-separation actions or activities will not be treated as divisible property.
Divisible property also includes passive income from marital property (e.g. interest and dividends), as well as passive changes in marital debt occurring after the date of separation and prior to the date of distribution. If a spouse’s actions/activities changed the marital debt (e.g. racking up credit card debt), this extra debt will not be treated as divisible property. The spouse who incurred the extra debt will be obligated to pay it.
Step 3: Figure Out How You Want to Sell
Real Estate Agent
Both spouses can decide on a real estate agent to list the marital home. It’s typically a good idea to sign a settlement agreement that documents the realtor’s roles; however, this agreement is not required in a North Carolina divorce. If both parties cannot come to an agreement, the clients’ attorneys may be able to agree on a realtor.
If the divorce goes to an equitable distribution trial, then the judge or a court appointed representative will choose a real estate agent for the sale.
Local Cash Home Buyer
Working with a local cash home buyer in North Carolina can save both spouses from having to agree on repairs/upgrades, paying for staging, paying realtor fees, etc. A cash buyer will purchase the home in as-is condition without open houses or repeated walkthroughs. It’s the most hassle free way of selling your home during divorce. The only thing both parties need to agree on is which cash buyer in the area to choose.
For Sale By Owner
Depending on the circumstances of the divorce, an FSBO home sale may be a good option if you want to avoid working with a real estate agent and have full control over the sale of your home. You don’t have to pay agent commission, but you may have less access to potential buyers. Working with your spouse to sell your property in North Carolina for sale by owner requires coordination and agreement, which may not be easy during divorce.
Step 4: Sell the House
Depending on which home sale method you choose dictates how quickly and hassle free your home sale will go in North Carolina. A local cash home buyer will be the fastest guaranteed sale as there is no waiting for buyer financing or contract contingencies such as home inspections or appraisals.
Working with a realtor will require some coordination between spouses to determine repairs and a waiting period while waiting to find a retail buyer; however, this will typically garner a higher price for the house than working with an investor.
It’s up to both parties to determine if waiting for the marital residence to sell while dealing with open houses, showings, contract contingencies, buyer financing approval, and paying agent fees is worth the higher price.
Step 5: Divide the Proceeds from the Sale
A fifty-fifty split of the home sale proceeds should not be the assumed division since North Carolina is an equitable distribution state. Keep in mind the fees and additional considerations to take into account after selling the marital residence:
2. : The remainder of your current mortgage needs paid off.
3. : If you choose to work with a realtor, you can expect to pay five to six percent in agent fees in North Carolina.
4. : Did you and your spouse take out a second mortgage on the home? This will need paid off with the proceeds of the home sale.
Who Gets the House in a Divorce in North Carolina?
In short, the answer to who gets the house in a divorce is it depends. If one spouse purchased the home before being married, he/she might think it is separate property, and therefore get to keep it after the divorce is finalized. However, this isn’t necessarily true. There are a few situations which can determine who will get the house in a divorce in North Carolina.
One Spouse Purchased the Home Before Marriage
If one spouse purchased the home before marriage but did not own it outright, the court will take into account whether the funds used to pay the mortgage during marriage were sourced from joint income. Typically, the court will not force the spouse to give up the home, but the court might order him/her to pay the spouse a share of the property depending on how much money that spouse put towards paying off the home during marriage.
Both Spouses Own the Home, One Wants to Sell
When both spouses acquired the home during marriage (therefore making it marital property) but only one wants to sell, there are several steps involved in making sure the spouse who wants to sell gets paid. First, the couple will have to refinance the remaining mortgage on the house in order to remove the selling spouse’s name from any liability on the home. Also, the selling spouse’s portion of the equity typically needs refinanced since they are entitled to half the equity.
Both Spouses Own the Home, Neither Want to Sell
When both spouses acquired the home during marriage and neither want to sell, the court will have to make the decision (unless both spouses agree to co-owning the house). Since North Carolina is an equitable distribution state, the court’s decision will be made based on what is fair for both spouses. This decision requires all other property to be taken into account to make sure all assets are equitably distributed.
The last scenario not mentioned above is when both spouses own the marital residence and both want to sell. This is the most straightforward situation as a home sale will occur. The proceeds would be split between each spouse (typically 50/50 unless the court deems a different distribution more equitable).
Should I Sell Before or After Divorce?
Selling the house before or after the divorce is finalized are both valid options in North Carolina. If there is a chance one party will not want to sell the house, this should be discussed and decided upon before the divorce is finalized.
Selling Before the Divorce
Selling your house before the divorce is finalized requires coordination with your spouse to ensure you’re on the same page– it is highly recommended to have an agreement signed by both parties if this is the route you choose.
The agreement should govern selecting a realtor or investor as well as recommended repairs (if choosing a realtor) and an agreement on the sales price as well as adjustments to the price. The more detailed you can make this agreement the less headaches you will encounter when you sell your house.
Selling After the Divorce
If you go to an equitable distribution divorce trial in North Carolina, it will most likely end in selling your house (unless the home is found to be separate property). Commonly a judge will order sale of the property and divide the proceeds. If either spouse wants to keep the marital residence, he/she should negotiate that arrangement with their spouse prior to trial.
Other Factors to Consider…
2. : Is either spouse looking to purchase another home right away or rent?
3. : Is one spouse making the majority of the mortgage payments, or are both paying equal amounts prior to the home sale?
Can a Court Make You Sell Your House in Divorce?
Yes, a judge can force you to sell your house in divorce, and there are two main reasons this could happen. The first is when one party is unable to buy out the other spouse’s interest in the property. The second reason is when spouses fail to agree on the home’s value, so the only fair way to divide the equity is to sell the house (if children are involved, you could do a deferred home sale, which means you agree to sell at a later date specified by the court).
How to Buy Your Spouse Out of the House When Lacking Liquidity
When there is not enough liquidity meaning neither spouse has enough assets or cash to buy out the other spouse’s interest, there are two options for tapping into the home’s equity.
1. Refinance: One party takes out a new mortgage that exceeds the amount of the current mortgage. The difference between the new mortgage and the existing mortgage is cash that could be used for the buy out.
2. HELOC: A home equity line of credit (HELOC) can be added to your existing mortgage, which enables you to access the equity in your home.
Who Gets to Stay in the House During Divorce?
Who gets to stay in the house during divorce is typically decided before filing for divorce in North Carolina. In North Carolina a spouse cannot file for absolute divorce until he/she has been living in a different house for at least a year and a day. The spouse must also have intended for the separation to be permanent during that time.
Can Children Affect Who Stays in the House During Divorce?
If both spouses want to reside in the marital residence without one another, they will have to come to an agreement on who gets to remain in the home. A separation agreement is recommended, especially when there are children. This agreement typically includes the details of separation, property division, spousal support, and child custody support. A divorce lawyer can help make these decisions.
Alternatives to Selling During Divorce in NC
“Buy Out” the Other Spouse
A buy out occurs when one party pays half of the market value to the other to gain sole ownership. This requires sufficient funds, but the spouse who pays can keep the house as sole owner. Funds could be acquired using a HELOC or by refinancing if the spouse cannot afford the buy out.
Buy outs make sense when there are children still going to school in the area or a spouse works nearby– instead of both spouses finding new homes, only one partner has to move. A buy out offers a simple split without forcing the entire family to move. A divorce can be hard enough on kids let alone moving to a new home and school district.
Co-Own the Home
If a house is underwater or can’t be sold due to poor market conditions, spouses can continue to co-own a house after divorce. In this scenario, the parties need to agree how payments will be split (mortgage, taxes, utilities, maintenance, insurance), who will make the payments, and how the property will be used.
One benefit of continued ownership is that the house can be sold at a later mutually agreed upon date, either when children are grown up or when market conditions are more favorable. The downside is that co-ownership requires cooperation between spouses and is only advisable if the divorce is amicable.
Divide the Assets
If neither spouse wants to sell the house, buy-out his/her partner, or co-own, a final option is allowing one party to keep the marital residence and the other spouse to keep additional marital property with equivalent value. For example, one spouse keeps the home while the other spouse receives a combination of assets such as cash, retirement funds, stocks/bonds, and even vehicles.
This only works when there is a large amount of marital assets, so each spouse can select property that it makes the most sense to keep. The advantages of dividing the assets is one party gets to keep the house and neither have to pay a lump sum of money. Further, you avoid having to sell your house altogether.
Final Thoughts: Selling a House During Divorce in NC
Divorce is never easy, and selling your house during divorce in North Carolina can be just as complicated. Not only do you need to consider the emotional toll it will take on you, but all of your assets are also up for consideration in divorce proceedings. With so many factors to consider and everyone’s personal situation varying, it’s important to understand the ins and outs of selling your house during divorce before making a final decision.
If you’re interested in bypassing the realtor process and want to see what a local cash home buyer can offer for your home, fill out our form below or give us a call. (984) 207-5882