The Marital Home Is Often the Biggest Asset to Divide
For most Florida families, the marital home represents the single largest asset in the marital estate. Deciding what happens to the family home is frequently the most consequential and emotionally charged issue in a divorce. Under Florida Statute 61.075, the court must equitably distribute all marital assets and liabilities, and the home is almost always a marital asset if it was acquired during the marriage or improved with marital funds.
Florida law provides several options for handling the marital home, each with distinct financial, tax, and practical implications. Understanding these options is essential for making informed decisions during settlement negotiations or trial preparation.
Option 1: Sell the Home and Split the Proceeds
The most straightforward approach is to list the home for sale on the open market and divide the net proceeds between the spouses. This option provides a clean break and avoids the complications of ongoing co-ownership.
Key considerations for selling include:
- Net equity calculation -- The relevant figure is not the sale price but the net proceeds after paying the mortgage balance, real estate commissions, closing costs, and any outstanding liens or HOA assessments
- Market timing -- If the real estate market is depressed, selling may yield less than the home's appraised value. Conversely, a strong market may make selling the most attractive option
- Capital gains implications -- Under current federal tax law, each spouse may exclude up to $250,000 of capital gain on the sale of a primary residence, provided they have lived in the home for at least two of the five years preceding the sale
- Listing and sale logistics -- The marital settlement agreement or court order should specify who selects the real estate agent, how the listing price is determined, how offers are evaluated, and what happens if the home does not sell within a specified timeframe
Option 2: One Spouse Buys Out the Other
A buyout allows one spouse to keep the home by compensating the other spouse for their share of the equity. This option is common when one parent wants to maintain stability for the children or when one spouse has a strong emotional or practical attachment to the home.
The buyout process typically involves:
- Determining the home's fair market value through a formal appraisal or, by agreement, a comparative market analysis (CMA) from a licensed real estate agent. In contested cases, each party may hire their own appraiser, and the court will determine value if they disagree
- Calculating the buyout amount -- Subtract the mortgage balance and any other encumbrances from the fair market value to determine net equity, then allocate each spouse's share based on the equitable distribution framework
- Offsetting the buyout against other assets -- Rather than paying cash, the retaining spouse often offsets the buyout by accepting a smaller share of retirement accounts, investment accounts, or other marital assets
- Refinancing the mortgage -- If both spouses are on the existing mortgage, the retaining spouse must typically refinance the loan in their name alone within a specified period. This is critical because, regardless of what the divorce decree says, the lender can still pursue both borrowers on a joint mortgage
Option 3: Deferred Sale
In some cases, the court may order or the parties may agree to a deferred sale, where one spouse retains exclusive use of the home for a defined period before it is sold. This arrangement is most common when:
- Minor children are in the home and the parents agree that maintaining stability in the family home serves the children's best interests
- Market conditions are unfavorable and both parties expect that waiting will yield a better sale price
- One spouse needs time to arrange alternative housing or build financial capacity to live independently
A well-drafted deferred sale agreement should address:
- The trigger event for the sale -- such as a specific date, the youngest child reaching a certain age, or the occurrence of a defined event (remarriage of the occupying spouse, for example)
- Maintenance and repair obligations during the deferral period
- Mortgage, insurance, tax, and HOA payment responsibilities
- How appreciation or depreciation in value is allocated between the spouses during the deferral period
- Dispute resolution mechanisms if disagreements arise about sale timing, price, or condition
Exclusive Use and Occupancy Orders
During the pendency of the divorce, the court may enter a temporary order granting one spouse exclusive use and possession of the marital home under Fla. Stat. 61.075. This does not affect ownership -- both spouses retain their interest in the property -- but it determines who lives there while the case is pending.
Factors the court considers include:
- The best interests of minor children residing in the home
- Domestic violence concerns that make cohabitation unsafe
- Each spouse's ability to secure alternative housing
- Which spouse is primarily responsible for mortgage payments during the case
Mortgage Liability: A Critical Concern
One of the most misunderstood aspects of dividing the marital home is the distinction between the court's ability to allocate the mortgage obligation between spouses and the lender's rights under the loan agreement. A divorce decree cannot modify the terms of a mortgage.
If both spouses signed the mortgage note, both remain legally liable to the lender regardless of what the divorce judgment says. The practical solution is refinancing:
- The retaining spouse refinances the mortgage in their name only, removing the other spouse from the loan
- The settlement agreement includes a deadline for refinancing, typically 90 to 180 days after the final judgment
- A contingency provision addresses what happens if the retaining spouse cannot qualify for refinancing -- usually requiring the home to be listed for sale
Failure to refinance exposes the non-retaining spouse to continued liability for the mortgage, potential credit damage if payments are missed, and difficulty qualifying for their own new mortgage.
Homestead Exemption Implications
Florida's homestead exemption under Article X, Section 4 of the Florida Constitution provides significant protections, including a property tax exemption of up to $50,000 and creditor protection. During and after divorce, homestead issues require careful attention:
- Only one spouse can claim the homestead exemption after divorce, typically the spouse who remains in the home
- The non-occupying spouse loses their homestead exemption as of January 1 following the date they cease using the property as their primary residence
- If the home is sold, each spouse may apply the homestead exemption to their new primary residence
- Portability of the Save Our Homes benefit allows a spouse who established homestead during the marriage to transfer their accrued tax savings to a new homestead property within two years
Underwater Mortgages
When the home is worth less than the outstanding mortgage balance -- commonly called being "underwater" -- the dynamics change significantly. Neither spouse has equity to divide, and selling the home may require:
- A short sale negotiated with the lender, which can have credit and tax consequences for both spouses
- Continued occupancy by one spouse who takes sole responsibility for the mortgage, effectively assuming a negative asset
- Allocation of the negative equity as a marital liability in the equitable distribution framework
In underwater mortgage situations, the court may offset the negative equity against other debts or assets to achieve an overall equitable distribution.
Getting Professional Guidance
The marital home decision involves legal, financial, and tax considerations that intersect in complex ways. Before agreeing to any arrangement, obtain a professional appraisal, understand the mortgage implications, and consult with both a family law attorney and a financial advisor. In the Fourth Judicial Circuit, courts have broad discretion in crafting equitable solutions, and the right guidance ensures your interests are fully protected.