Who keeps the house?
Perhaps the most pressing question to anyone going through a divorce. Moving interrupts jobs, income, schools, neighborhoods, and personal relationships.
If spouses can’t decide themselves who gets the house, the answer depends on whether Washington law deems the house “marital property” or “not marital property”(also known as separate property).
Arizona State is one of the few remaining community property states in the United States. Community property is defined under RCW 26.16.030 but generally, all items considered marital property and owned equally.
“Marital property” is divided between divorcing spouses, and “non-marital property” remains with the current legal owner.
What counts as “marital property” can be confusing. Just because a house is in the name of only one spouse does not make it separate property (for example – if marital funds paid for it). Even if a spouse bought it prior to marriage, the house can be marital property if marital funds paid down the mortgage.
Let’s dive into how Arizona defines marital property with some common examples.
What Is Considered Marital Property in Arizona ?
Arizona divorce law requires an “equitable distribution” of marital assets. Unless certain factors indicate that a 50/50 split would not be fair, marital assets are divided 50/50.
What is considered marital property in Arizona ?
Washington law creates at least seven categories of marital property:
- Assets acquired during the marriage, individually by either spouse or jointly.
- Enhancement or appreciation in the value of nonmarital assets resulting from the efforts of either spouse during the marriage or from the expenditure of marital funds.
- Paydown of a mortgage secured by nonmarital real property and a portion of any passive appreciation in this property, if the mortgage is paid down from marital funds.
- Interspousal gifts during the marriage.
- Benefits, rights, and funds accrued during the marriage in retirement, pension, profit-sharing, annuity, deferred compensation, and insurance plans.
- Real property held by the parties as tenants by the entireties, whether acquired prior to or during the marriage, shall be presumed to be a marital asset.
- Personal property titled jointly by the parties as tenants by the entireties, whether acquired prior to or during the marriage.
Here are some “real world” examples of what would be deemed marital property:
- Bank accounts where either spouse deposits their paycheck.
- Real estate acquired and paid into during the marriage.
- Cars or other vehicles purchased during the marriage.
- Retirement accounts that received funds or were created during the marriage.
- Insurance benefits acquired during the marriage;
- Gifts from one spouse to another
- Pension benefits, workers compensation benefits, social security income, and stock options during the marriage
What Is Non-Marital Property?
Not all property acquired by a spouse during a marriage (or held before the marriage) is deemed “marital property” and so legally subject to be divided upon divorce.
Washington law creates at least six categories of “not marital property”:
- Assets acquired prior to the marriage.
- Vehicles owned before marriage.
- Assets acquired separately by either party by non-interspousal gift, bequest, devise, or descent.
- Income derived from nonmarital assets during the marriage unless the income was treated, used, or relied upon by the parties as a marital asset.
- Assets excluded by valid written agreement of the parties.
- Liability incurred by forgery or unauthorized signature of one spouse signing the name of the other spouse. Any such liability shall be a nonmarital liability only of the party having committed the forgery or having affixed the unauthorized signature.
In Arizona , examples of separate property would be:
- A bank account that you opened and contributed to before you were married; no contributions were made during your marriage using marital funds.
- An inheritance that you received either before or during your marriage that has always been kept separate from marital property and no funds of your own were contributed during the marriage. The state of Arizona allows some separate property to become marital property.
- A gift to only one spouse at the exclusion of the other.
Assets & Liabilities: Be aware that “marital” and “not marital” property doesn’t only apply to valuable assets. Liabilities including mortgages, credit card debt, medical bills, or other money owed are also subject to marital distribution. If your spouse ran up substantial debts, you could be on the hook for it!
How Arizona Divides Marital Property
Wondering if Arizona is a “community property” or “equitable distribution” state when it comes to divorce?
“Equitable distribution” states divide property “equitably” – and may deviate from a 50-50 split in some circumstances. “Community property” states require an absolute 50-50 split of all property acquired throughout the marriage.
Arizona is a “community property” state. Marital assets are divided in a 50/50 ratio
Here’s how Seattle attorney Molly B Kenny explained it:
Arizona is a community property state. Community property is property owned by the marital community. Once two people become married they become an entity and they become a community. Property that is owned by that community is then community property. For example, If you get married and then buy a house using wages earned during the marriage, that house is community property. On the other hand, if you own a house before the marriage and you still own that home after marriage, that house doesn’t convert to community property because you owned it before marriage. It remains separate property.
Here are the factors that would lead a court to consider some other split besides a 50/50:
- Contribution to the marriage by each spouse, including contributions to the care and education of the children and services as homemaker.
- Economic circumstances of the parties.
- Duration of the marriage.
- Interruption of personal careers or educational opportunities of either party.
- Contribution of one spouse to the personal career or educational opportunity of the other spouse.
- Desirability of retaining any asset, including an interest in a business, corporation, or professional practice, intact and free from any claim or interference by the other party.
- Contribution of each spouse to the acquisition, enhancement, and production of income or the improvement of, or the incurring of liabilities to, both the marital assets and the nonmarital assets of the parties.
- Desirability of retaining the marital home as a residence for any dependent child of the marriage, or any other party, when it would be equitable to do so, it is in the best interest of the child or that party, and it is financially feasible for the parties to maintain the residence until the child is emancipated or until exclusive possession is otherwise terminated by a court of competent jurisdiction. In making this determination, the court shall first determine if it would be in the best interest of the dependent child to remain in the marital home; and, if not, whether other equities would be served by giving any other party exclusive use and possession of the marital home.
- The intentional dissipation, waste, depletion, or destruction of marital assets after the filing of the petition or within 2 years prior to the filing of the petition.
- Any other factors that are necessary to do equity and justice between the parties.
Options When Selling a House During Divorce in Arizona
Divorces are not easy for anyone involved. We put this together so you know you have options when selling a house during divorce in Washington State
Option #1: “Buy-Out” The Other Person
A “buy out” occurs when one spouse pays half of the market value to the other to gain sole ownership. The spouse who paid may now live freely without interference at the property.
“Buyouts” makes sense if family members need to continue living in the neighborhood. Do the children go to school nearby? Does a spouse have a job requiring a house in this location? “Buyouts” offers a clean break without requiring the family to completely up route their lives.
The downside, of course, is that the person “buying” out the other party does need to have sufficient financial resources to pay to buy out the other person.
Option #2: Co-Own The Home Afterwards
Spouses can continue to “co-own” a house after divorce. In this scenario, the parties need to agree on how payments will be split (mortgage, taxes, utilities, maintenance, insurance), who will make the payments, and how the property will be used.
If a house is underwater or can’t be sold for some other reason, “co-owning” may be the only option. Stuck with a house that nobody wants to live in and you can’t sell? Renting is a “last resort” option in this scenario.
One benefit of continued ownership is that spouses can continue to use the property – which is helpful to prevent all family members from unnecessary upheavals. The downside is that co-ownership will be difficult if the spouses cannot get along. Co-ownership is only advisable if the divorce is amicable.
Option #3: Sell The Marital Home
Selling the house following divorce is the more straightforward option.
Once the house is sold, the sale proceeds can be easily divided as the spouses see fit. The money can be used to find new housing, pay attorney fees, pay debts, and otherwise move with their lives. The disadvantage is that everyone will have some interruption in their living arrangements as everyone moves away from the property.
If your house needs some work before selling, consider selling “as-is”. The advantage here is to save the frustration of renovations, the money spent on the repairs, and close at a faster date. Check out our Sell a House AS-IS: The “Interactive Guide” for full guidance on making the decision to “sell as-is” or make renovations 🔨.
Thinking about selling a house? We’d love to make an offer. Our company House Heroes has been buying property for over five years. Learn more about our Simple Home Buying Process here.
Option #4: Dividing The Assets
A final option to consider allowing one spouse to keep the house, and another spouse to keep other marital property of approximately the same value.
For example, one spouse will keep the family home and another will receive a mixture of cash, stocks/bonds, transportation vehicles, and other assets.
Assigning the house to one spouse works where there is a large pool of marital assets (so each spouse can select the property that it makes the most sense for it to keep). The advantage is that the party that receives the home will not have to get “uprooted”.
Determine if (and when) You Will Be Selling Your Home During Your Divorce in Arizona State
After reviewing all the options above, you may decide that selling the house during the divorce process is the best solution.
It’s important when selling a house during a divorce in Arizona State to keep a timeline.
Setting a timeline for the sale process can make the transition smooth. Each spouse can plan living arrangements and their financial circumstances with an approximation as to when they will receive the sales proceeds.
For example, agreements are made where one spouse uses the house for a set period of time (this is usually used when there are children in the home), and then sold at a certain date (usually when the children reach a certain age).
You should put your home for sale in advance. Set firm closing dates, moving dates and times, and coordinate which spouse will be handling the sale (or talking to the real estate agent). Make sure that each of these agreements are in writing, and negotiate penalties for breaching the agreements.
Make sure both spouses are in agreement with the sale time frame to avoid potential conflicts in the future. This helps ensure a smooth, surprise-free home sale.
Get Professional Help – Agents and Home Buyers / Investors
Selling a home is a difficult process when everything is going right.
When selling a house during a divorce, you have a lot going on, and a lot to consider. You shouldn’t take on the task of selling you home yourself. You may have disagreements with your spouse about selling price or other issues. By working with a real estate professional… either a reputable agent or real estate investment firm, you’ll both have a neutral third party who can help you determine a fair selling price and handle the marketing of your home.
We are at Cowley home buyers have been buying houses in Arizona since 2020. Our company has 5-star social media reviews and video testimonials from sellers we’ve worked within the past. The Cowley Home Buyers makes fast cash offers, as well as other “win-win” offers that work with both the property owner and us.
Selling Your House Fast For A Fair All-Cash Price
One option for divorcing couples that want to resolve the housing issues ASAP is getting an all-cash offer.
Cash offers have multiple advantages:
- No banks are needed to approve the sale. Bank approvals can take 60+ days and then decline the mortgage at the last minute.
- No “appraisal contingencies” – an appraiser can’t decide the house is worthless.
- Banks only issue mortgages on property in good condition. If the house has some problems, cash buyers may be the only way.
- Direct cash offers save you on-going holding costs that are incurred while leaving a home on the open market for months.
By protecting each party with a qualified real estate agent or simply jointly deciding to sell and selling fast to a real estate investment firm like Cowley home Buyers , and moving the process as quickly and according to an agreed-upon schedule, all parties can walk away from the sale without stress.