How to Divide Equity in Divorce

Equity is defined as the difference between the value of real estate owned and the amount still owed against it on a mortgage. A divorce provides for the equitable distribution of the couple's assets, including any equity they may have in their family home. While having an agreement with your spouse will keep you from spending too much on lawyers, you should still seek legal advice in this situation. Here are several things to consider if you need to know how to divide equity in a divorce, .


  1. Image titled Divide Equity in Divorce Step 1
    Seek legal counsel.
    • Always seek legal advice in any type of contract negotiation, including a divorce. Only a licensed attorney can help you ascertain your rights and prepare a strategy.
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    Research the laws of your state.
    • In some states, the court will prefer that the marital assets are split evenly between the parties.
    • In other states, a parent with physical custody of dependent children may have additional rights to a marital home.
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    Consider which party put more into the purchase of the property.
    • If your intention is to be fair when distributing the marital assets, you will want to divide the assets and debts, including how to split the house, based on several factors such as contribution and the length of the marriage.
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    Decide if one party will remain living in the house.
    • It may be best for minor children to stay in the existing family house. If so, try to come to an agreement that prioritizes their interests.
    • If neither party wants the house, the best solution may be to sell the property and evenly divide equity proceeds of the sale between the parties.
  5. Image titled Divide Equity in Divorce Step 5
    Evaluate the financial situation of both parties. ​​
    • One party may be better equipped to deal with the mortgage payments, upkeep and maintenance of a house. In this scenario, the remaining party may purchase the other party's equity with cash or by conceding other assets.
    • It may be preferable to have one party assume the mortgage while the other assumes a similar amount of debt if you have substantial debts that also need to be divided.
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    Investigate the real estate market in your area.
    • You may need to wait for better market conditions if you owe more on the mortgage than you can expect to get when you sell the property.
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    Draw up an agreement and other necessary documents.
    • In most states, one party will file a petition for the dissolution of the marriage and becomes the petitioner.
    • If both spouses agree, the respondent, or other party, will file an entry of appearance document stating that he or she is aware of the petition and does not contest it.
    • Both parties can present a signed and notarized agreement for the distribution of the marital assets and debts, as well as provisions for other matters like child custody and support or spousal support.
    • If the court deems the agreement fair, the agreement will be incorporated into an order dissolving the marriage and it will become a legally binding document.
    • If the parties cannot reach an agreement, the process becomes much more complicated and varies greatly by state. Your attorney will guide you in this process.


  • There is rarely anything material that is worth fighting a lengthy court battle over. Knowing that you won in court will not repair the probable emotional damage done by the battle and you will likely pay a considerable sum for the victory.
  • Having an agreed-upon plan to distribute your assets is always preferable to the court and reduces the chance that the court will render a decision that is not in your favor. Whenever possible, attempt to negotiate with your spouse and prepare an agreement for the distribution of property.


  • Never attempt to hide real estate or other assets from the court in an attempt to punish your spouse. Splitting all assets is always preferable to jail time or exorbitant fines.

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Categories: Divorce