Deciding to divorce means accepting an assortment of challenges. Some couples have children and will need to negotiate custody arrangements. Most couples share valuable property with each other and may also have shared financial obligations that will need to be addressed during the divorce process.
In Arizona, the property division statute is a community property law. The courts will treat whatever people have acquired during their marriages as shared community property. The goal is often an equal or near-even split of marital resources and debts. Therefore, if a couple bought a house together, each spouse should receive a portion of the equity in the property.
How can someone ensure that they receive their fair share of home equity if they don’t want to retain possession of the marital home?
They need to know it’s fair market value
One of the most important steps for protecting one’s interest in real property will be knowing what it is worth. The amount that a couple paid for the house isn’t necessarily its current fair market value. Even the tax assessment will likely be far lower than the current value of the property on the open real estate market.
Most people need to bring in an appraiser to determine exactly what their homes are worth. In some cases, spouses may even seek two separate appraisals if the first one seems too low or too high to one of the spouses. They may then have to split the difference and set the value of the home in the middle of the two appraisals.
The spouse keeping the home will typically need to refinance the mortgage. Doing so gives them an opportunity to remove the other person from the deed and from the note for the mortgage. Typically, they will also withdraw a certain portion of the home equity to compensate their spouse. Other times, people may calculate what each spouse’s share of home equity would be and will then seek to retain other assets that are worth a comparable amount.
Either approach can be fair depending on factors ranging from someone’s credit score to the other resources included in the pool of marital assets. Knowing how much a property is actually worth is a crucial first step toward obtaining a fair share of the home’s equity during an Arizona divorce.