Buying Out the House in a Divorce

Posted On March 17, 2021 Divorce

Divorce is never an easy undertaking and can be especially stressful when jointly owned property is involved. In Washington, property is divided according to community property laws. This means that any property, including a house, acquired during the marriage belongs to both parties. The couple can either work out an arrangement on their own if one party wishes to keep the house, or if they can’t agree, the judge will render an order awarding the home to one spouse or that it be sold.

Washington’s Community Property Laws

In general, community (or marital) property is split equally in Washington (RCW § 26.16.010). Property is considered “community property” if either party acquires it throughout a marriage. For instance: 

• Earnings of either spouse during the marriage (including capital gains, interest on investments, retirement benefits, and other assets);
• Property obtained with earnings during the marriage; and 
• Property obtained with community funds. 

There are exceptions, and some items are considered “separate property.” Separate property such as the following are typically not divided in a divorce: 

• Inheritances; 
• Gifts to only one spouse; and
• Items purchased before marriage.

However, separate property can get commingled with community funds and lose its separate property status. 

Factors in Who Gets the House

The following factors can help you figure out who may get the house or whether you will have to sell it. 

1. Who Owns It: this may seem straightforward, but sometimes it’s not. Community property is typically awarded 50/50, but if the house belongs entirely to one spouse, they will normally receive it in the divorce. Unless the parties come to a separate agreement. If it is considered partly separate and partly community property, the spouse who has separate property interest will likely get the house. However, this may be determined on a case-by-case basis. 
2. Enforceable Agreement: if there is already an enforceable agreement in place (e.g., prenuptial agreement, separation contract, settlement agreement), a judge will almost always uphold it.
3. Who Can Afford the House: unless the house is separate property, the higher-earning spouse will generally receive it. A judge will typically not award a home to a party who can’t afford the mortgage payments. 
4. Kids are Involved: the courts try to avoid moving dependent children from their family home. The party who has primary custody will likely get the house. 
5. Home Business: if one spouse runs a business out of the home, a judge may be inclined to award it to them. (e.g., daycare)
6. Avoiding Relocations: if only one party is living in the home, the court may award it to them to minimize disruptions to both parties. 

What is a House Buyout?

Rather than selling a house during a divorce, often it is easier for one spouse to buy the other spouse out. In other words, the buying spouse pays their ex according to the current value of the home or by offering to take over their share of the mortgage. The buying spouse will need to refinance to remove the selling spouse from the mortgage. This is commonly done when children are involved so that they can remain in the family home. 

A buyout, however, is not without issues. If the parties lack other, more liquid assets, it can be challenging to find the cash to buy the other party out. In those circumstances, the parties may elect to do an offset against other assets. For example, the selling spouse receives a more significant share of an investment or retirement account as compensation for the real estate interests.

Do I Need a Lawyer to Buyout My Ex?

Given the complexity surrounding the division of real estate in a divorce, it is important to consult with an experienced Washington divorce attorney. They are familiar with the law governing real estate transactions at the outset of a separation or divorce and can help with paperwork, unforeseen pitfalls, negotiations and guide you through the entire buyout process. Easing the burden, while also ensuring your property is fairly divided.