Sale of the Marital Estate in New York

One of many issues which must be dealt with when getting divorced is what to do with the marital estate.  For purposes of this article, we are going to assume the martial estate was purchased during the marriage from marital funds.  Future posts will deal with a marital estate that was either originally separate property or separate property was used to purchase the estate.

The marital estate is marital property and must be disposed of in accordance with the Domestic Relations Law.  The first option is to simply sell the home. Once the sale is complete, any profits or losses are to be shared equally between the parties.  If you have been following these posts you know by now that nothing is that simple.  The other option is to have one party buy the other party’s interest.  You simple decide on a fair price and the party wishing to remain in the home must buy the other party’s interest in the home.  Yet another option is to trade your interest in exchange for other marital property or responsibilities.

For instance, we recently had a case where our client, wife, was to retain physical custody of the children.  The husband did not want to pay child support and we were heading straight to a trial.  We began discussing the marital estate.   There was significant equity in the house.  We agreed to have the husband waive his interest in the house in exchange for his child support obligation.  We simply calculated what his child support obligation would be and compared it to his equity in the house.  As both numbers were close, this was a creative way to have the wife keep the marital residence, the children stay in the home they were used to and dispose of the marital estate.

The most challenging aspect of the marital residence is when one party does not want to sell the asset yet wants to be divorced.  Fear not, the house will be sold however if you cannot get the parties to agree, then you must look to the Court for assistance.  In our example, the marital estate is own by the parties as tenants by the entirety.  Therefore, the Court will lack the authority, absent the consent of the parties, to order a sale of the marital estate while the parties are married.   If your spouse stands their ground, the Court can order a sale after you are divorced.  The Court can and will order how the net proceeds or liabilities are to be split.

Then there is the hybrid case, where both parties want to sell the house but there are young kids involved.  Another possibility that is often used is to allow the spouse who retains physical custody of the children to remain in the house.  That spouse will be responsible for all the bills related to the marital estate and will agree to indemnify the spouse who is moving out in the event any liabilities relating to the house arise.  Normally in the separation agreement, there is language which provides that the spouse who remains in the house shall pay all bills relating to the estate and that in the event the mortgage is not paid for a certain amount of months, the house will be automatically put up for sale.

Disposing of the marital estate can be complicated and is not as easy as simply selling off the estate.  If you are contemplating divorce and you believe the marital estate may be an issue, contact us immediately to begin preparing your matter.

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