Friday, May 9, 2008

Should I Keep the House?

Some people skip this question and jump right to, "Can I keep the house?" In many cases, it is possible to keep the house, but it is not a wise decision. I have recently had several cases where one side, or sometimes both sides, wanted to keep the house and an objective observer would have told the party or parties that they were crazy. Such a blunt assessment is often not effective in ending the quest for the house. Often, the fight continues until a judge resolves the issue. Such judicial intervention often results in a house being sold, even after a long fight by a party to keep it. It seems that not very many people are really rational in deciding what to do with their home and that is understandable. This post is for people who are able to thoughtfully consider the various factors that affect the decision about the house. The post will not help people who are operating at a purely emotional level.

To effectively analyze the situation and come up with an appropriate answer, you need to dig deep and come up with the real reason why you might want to keep the house. Here are some possible reasons.

1. You really love the house. Some people have no special feeling toward a house. Others profess undying love for their house. It may be the location, location, location, or there could be some unique features in the house that you really can't find anywhere else. Maybe it's the layout or the closet space or the garage or the storage or the yard or the pool or something else. Maybe it's your "dream house" that you searched for forever. Maybe you really love the neighbors. The truth is that there are great houses in the world, but almost all can be replaced. There can be many other great locations and neighbors. Other houses may have a whole host of wonderful features. And you can gradually create a new dream home somewhere else. If you got transferred by your job to another city, you would have to cope with the change.

It may be helpful to write down what it is about the house that you really love. You can add what unique attributes you find in the house. It's also helpful to remember that no house is perfect. Even the best of houses probably has room for improvement. Write down what you would want to change if you were able to. Those issues would help you make a more realistic evaluation. If you take the good and the bad factors together, you will have a checklist of factors to consider in looking for another house. Writing the bad factors down will give you some perspective and remind you that the house was not really perfect, and writing down all the factors will help you realize that there can be more than one house for you.

2. Financial advantages and disadvantages of the house. Whether a person wants to keep the house often relates to financial issues. If there's a low interest rate, low mortgage balance or low payments, the homeowners are often reluctant to give up the bargain they are enjoying. On the other hand, if there is a substantial equity in the house, many parties prefer to sell the house and cash in their chips. Other people face high mortgage payments which may be unaffordable for just one of the parties. Some others fear that they wouldn't qualify for a new home loan with just their income and perhaps the parties' credit rating has deteriorated over the years if they struggled financially. The owners need to realistically assess their situations for the future to decide if it makes sense to try to keep the house.

3. Punishing the spouse. Some parties will want to have the house sold out from under the spouse to get back at the spouse for real or imagined slights or to be controlling. If one spouse knows the other spouse really wants to keep the house, the first spouse may threaten to have the house sold in order to frighten and control the other party. Some parties may try to keep the house to keep the house away from the other spouse or to try to tie up their soon-to-be-ex-spouse's credit.

4. Keeping the house for the kids. This reason is often a subterfuge for the parent with the kids. While there can be many factors that make a house enjoyable for kids (similar to #1 above), houses and schools can be replaced. Some parents will argue that they need to house to maintain stability. That can have some effect, but there will be change in the kids' lives no matter what and kids are generally pretty resilient. There will be a visitation order that shares time between the parents and the kids will probably be spending considerable time in two separate households. One parent is really trying to blackmail the other if they are saying they need to keep the house for the kids. The adults are entitled to at least equal consideration on the house issue.

5. Party owned the house before marriage. In Texas, that makes the house the separate property of the owner and the court will not ordinarily have the ability to take away the separate property from the owner, assuming the owner can provide sufficient proof of the prior ownership. There are a few ways for the other spouse to get some money out of the house, but they probably can't become the owner or force the owner to sell it. In Texas, however, either spouse can claim a homestead right to possession of the house, and that would enable them to continue to live in the separate property house of their ex-spouse for a while. The homestead right does not create ownership, however.

6. Inability to sell the house. There are often reasons why the house can't be sold, even without legal impediments. The house may be in such bad condition that it can't realistically be sold at all, or it could only bring a small amount of net equity. The housing market could be really down in certain areas with the result that houses aren't selling or they're selling for very low prices. Some areas have had a lot of new house building currently or recently which makes it virtually impossible to sell a pre-owned home, much less make anything on the sale, in that area. Some parties are upside down with their mortgages and owe more than the house is worth. They would have to pay off the balance of the mortgage in order to complete the sale, and it's hard to get people to do that.

There's something about a house that seems to make people behave irrationally. If you think you want to keep the house after your divorce is final, look at the above considerations before deciding for sure that you want to either sell it or keep it. There's often a lot of money at stake, so the decision should be made rationally, rather than just emotionally. And it's a good idea to consult with your attorney about this decision before you make it.

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