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Selling a House After Divorce Agreement

Following a divorce and the final dissolution judgment, selling a home can restart litigation and create a headache for all parties involved.  Selling a house after divorce can be intimidating, but with this helpful guide, a path forward should start to appear. 


Dissolving the equity in a home, which is commonly a person’s largest investment, is stressful, time-consuming, and anxiety-provoking.  Adding litigation onto this process only complicates the matter at hand.  Often, wives and husbands ask

“Can I be forced to sell my house in a divorce?”

In New Jersey, the courts divide all “marital property” equitably, which means fairly, not equally.  Marital Property refers to any property either partner acquired during the marriage, but not any property that was acquired via inheritance or gifts.


There are circumstances where a court can force a sale of a home after a divorce, which will be covered in the below scenarios.  Dealing with splitting the home usually occurs in one of three ways:


  • Sell the House: This is the simplest option and the most recommended option due to the simplicity and possibility for a quick sale.   By liquidating the asset (the home), both parties are able to equitably split the proceeds and move on.

  • Buy Out:  One of the partners may choose to buy the other partner out of ownership of the house.  This most often occurs by the Purchaser re-financing the home and using some of the equity in order to pay off the other party.  There are many terms and costs that must be reviewed, but this is another solid option to settle a home after a divorce.  If this does occur, then there are usually no capital gains taxes or federal taxes assessed to the person who is being bought out of the ownership of the home.

  • Co-Owning the House:  This option most often occurs when there are children involved and neither party would like to disrupt the current routines.  While this is an honorable approach, there are risks that must be discussed.​​


For example, assume that following a divorce, a wife remains in the house while the husband remains on the mortgage.  If the wife falls behind on the payments, then the husband is still responsible, and the lender can require the husband to pay the mortgage or face detrimental credit ratings and late fees. 


In this instance, NJ Divorce Solutions references a case where the court ordered the home to be sold within 30 days to rectify this debt.  There have even been recordings of a court order to sell the home after divorce to relieve the debts, which is why a quick sale may be the best option when facing divorce.


The court system usually does not allow a house to be sold prior to the completion of a divorce.  There are a few exceptions to the rule which include a pre-foreclosure status on the home, or financial hardships

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Selling a House After Divorce Guide

Step 1: Prior to the listing, determine who will live in the home.


If both parties will not be remaining in the home, then it is vital to determine who will be living in the home during the sales process and who will be responsible for showings. The best option is for both parties to amicably remain in the home.  A quick sale may help speed up this process and simplify the issues.


Step 2: Determine who will be responsible for mortgages, taxes, insurances, and other various bills.


As mentioned earlier, these debts are legally shared responsibilities, which means that these bills are due even if one partner is not living in the home.  Communicate early to determine who will be ultimately responsible for these bills and make sure to keep an open line of communication to ensure that the bills are actually being paid. 


Step 3: Determine how to sell the home.


  • List With a Realtor: A time-consuming, work-intensive process that will ultimately get the most possible money for the home.  As long as both parties agree to maintain the bills during the time to prepare and sell the home (right now, on average about 3 months in NJ) then this process makes a lot of sense. 


  • Quick Sale:  One way to simplify the process is to collect a cash offer and determine if the ease and simplicity of this option suit your scenario.


Step 4: Determine how equity will be split following the proceeds of the sale.


Depending on each unique situation, there will either be excess equity (profit) or remaining debt (losses) following the sale of a home. Both parties must negotiate in order to determine their responsibilities.


Step 5: Sell the home and split the profit.

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