Going through a divorce can be an extremely difficult and emotional time. One of the most complex issues that often comes up is deciding what will happen to the marital home. For many couples, their house is their biggest asset.
Determining who gets to keep the house, how to split the proceeds if it’s sold, and dividing the equity fairly can become points of major contention and debate in divorce proceedings.
If you’re facing these questions about your Minnesota home in your upcoming divorce, this guide will provide an overview of your options under state law.
Is the Marital Home Considered Separate or Community Property in Minnesota?
Minnesota is not a community property state. Marital property laws operate differently than community property states like California.
In a community property state, most assets and debts acquired during the marriage are considered jointly owned 50/50. This includes the house. So, in these states, the starting point is that the home equity and value are automatically split down the middle in a divorce.
Minnesota utilizes an equitable distribution approach instead when dividing marital assets like the house. This gives the court much more discretion in determining a fair division based on the specific circumstances of the marriage. The house and its value do not have to be divided equally.
So, in Minnesota, the marital home is not considered separate property that automatically belongs to one spouse. But it also does not default to a 50/50 split like community property states. How the equity and/or proceeds from the home sale will be divided depends on many factors we’ll explore throughout this article.
Does Minnesota Law Specify Who Gets the House in Divorce?
Minnesota statutes do not designate that the house must automatically go to one spouse or the other in a divorce. Section 518.58 of the statutes says that a judge must make a “just and equitable division” of all marital property.
This gives the court significant leeway in deciding who gets the house on a case-by-case basis. The judge will take into account a variety of factors like:
- Length of the marriage
- Contributions to the home by each spouse (financially and through improvements/maintenance)
- Age and health of each spouse
- Income and financial stability of each spouse
- Custody of any minor children
- Separate non-marital interests in the home by one spouse (ex: brought it into the marriage or inherited)
Based on these criteria and the overall equities of the situation, the judge will determine if:
- One spouse keeps the house
- The house is sold, and proceeds divided
- The house continues to be co-owned after the divorce
There is no hard and fast rule under Minnesota law that the house automatically goes to the parent with primary custody of minor children, for example. But having minor children and being the primary caretaker are factors a court will consider favorably when deciding if you get to keep living in the home.
How is Home Equity Divided in a Minnesota Divorce?
Figuring out how to divide the equity in your home can be one of the trickiest parts of finalizing a divorce settlement. Equity essentially represents how much of the house you actually own.
It’s calculated by taking the current market value of the home and subtracting any mortgage debt still owed: Home Value – Mortgage Debt = Equity
Let’s say the house is worth $300,000 on the market. You and your spouse still owe $150,000 on the mortgage. So the total equity would be: $300,000 – $150,000 = $150,000
Dividing something so valuable equitably can become highly contentious. Under Minnesota law, equity in the marital residence is considered joint marital property, just like your other assets. So, it’s subject to the same equitable distribution standard during divorce proceedings.
Some options for splitting the equity include:
- One spouse keeps the house and buys out the other spouse’s share of equity. For example, you keep the house and pay your ex $75,000 for half of the $150,000 equity. This may require you to refinance the mortgage or take out a home equity loan.
- Sell the house and split net proceeds. If selling the home, you would split any profits from the sale 50/50 after paying off the mortgage balance and any realtor/closing fees.
- Continue co-owning after divorce. This is rare and generally inadvisable, but Minnesota does allow ex-spouses to continue jointly owning a home together. You would still split equity and profits down the road when eventually selling.
- Offset value. One spouse keeps the house, but the other spouse gets to keep a larger share of retirement accounts or other assets to offset the value of the home equity.
As you can see, dividing equity in a home is rarely straightforward. Hiring an experienced Minnesota family law attorney to help negotiate the options to protect your interests is highly recommended.
What if Only One Spouse’s Name is on the House Title or Mortgage?
In some cases, only one spouse is on the legal title for the home or listed as the borrower on the mortgage. This happens frequently when one person purchases the home before the marriage.
But even if the home was acquired during the marriage, sometimes only one name ends on all the paperwork. This often occurs for financial reasons—only one spouse qualified for the mortgage at the time.
The key thing to understand is that in Minnesota, it does not matter whose name is or is not on the house title and/or mortgage. If the home was obtained during the marriage, it is still considered a joint marital asset under state law.
The spouse who is not on the paperwork still has a legal claim and rights to the property. They are entitled to their fair share of the equity and proceeds if sold. The fact that you’re not on the title does not mean your ex automatically gets to keep 100% of the house in the divorce.
Should I Sell the House Before Divorce?
Some couples consider selling their shared home either right before or amid divorce proceedings.
There are a few reasons why you might want to sell the house sooner rather than later:
- Avoid arguments over who keeps it. Selling the house and splitting profits removes a huge point of contention. You don’t have to fight over equity percentages or who deserves to stay.
- Split proceeds sooner. For some couples, getting their share of home equity can provide needed funds to start their new life after divorce. If only one keeps the house, the other spouse has to wait an indefinite period to get their share.
- Reduce expenses. Owning a house means ongoing expenses like the mortgage, taxes, insurance, utilities, and maintenance. For the spouse moving out, eliminating these costs can be a relief.
- Emotional reasons. Some spouses want a fresh start in a new home without the memories or attachments to the marital residence.
While selling immediately makes sense on paper, timing the sale poorly could result in taking a lower price. If possible, it is often wisest to wait until the divorce is finalized before listing the home for sale.
I Want to Keep the House—What Are My Options?
If you want to remain in the marital home, how does it work? Here are some paths to explore for keeping the house in your divorce:
- Buy out spouse’s share of equity. You can pay your spouse their equity in a lump sum. Then, you become the full owner.
- Take over mortgage payments. If you can qualify to refinance the home into your name only, this removes your ex from the mortgage liability while allowing you to stay.
- Offset with other assets. Your spouse gets a greater share of other assets like retirement funds to offset the home value you keep.
- Pay ex rent. Sometimes, the ex-spouse agrees to let you stay in return for monthly rent payments over a defined period.
- Shared title after divorce. As mentioned, Minnesota allows divorced spouses to co-own. But this is extremely rare and risky.
Consult a divorce lawyer to determine whether these options are feasible. You must consider costs, tax implications, and long-term financial security. If you need counsel and representation on dividing real property and all other aspects of your Minnesota divorce, please contact the experienced team at Martine Law.
We have experience in resolving housing and asset division through negotiation, mediation, and in court when needed. Schedule a consultation today to discuss your situation and options.
