Family Law: Equity in Family Home in Divorce
When a couple divorces in Washington, the equity in the family home is divided along with the other community property in a fair and equitable manner. If the parties are in agreement, the house can be sold and the equity split between them. The Court will rarely order a forced sale, with the exception being if the house is going into foreclosure for failure to make the monthly payments, and a sale would preserve that equity.
If the parties cannot agree, typically the Court will award the family home to one party, and give the other party a lien for the amount of their share of the equity, secured by a Note and Deed of Trust. The Court would then set a period of time for the lien to be paid off, and set a reasonable rate of interest. This allows for the stability of one party being able to stay in the family residence, and gives them a period of time to come up with the money to pay off the lien. Hopefully in that period of time, the party’s financial situation will have improved and they will have either saved the money, refinanced the house, or can then sell the house to pay off the lien.
Sometimes, the parties continue with joint ownership of the family home as tenants in common. The courts rarely order this and it is typically not advisable, with the exception of immediately selling the house and dividing the equity. In this case, there needs to be a detailed agreement spelling out the terms (occupancy, payment of mortgage, taxes, insurance and utilities, division of equity, etc.) pending sale.
A family law attorney can advise you about the specifics of your case, the options available, and insure that your interest in the family residence is secured.