When a couple shares a family home, vacation property and/or investment real estate, managing these assets during their divorce can be a complicated undertaking. Generally speaking, any real estate matter requires careful consideration of financial, legal and personal concerns as a divorce case unfolds. As such, for couples divorcing in Illinois, understanding how real estate is treated under state law is key to making informed decisions.
Illinois is an equitable distribution state, which means that if a court is called upon to resolve disputes, marital property is meant to be divided fairly, though not necessarily equally. Marital property generally includes real estate acquired during a marriage, regardless of whose name is on the title. Exceptions may include property acquired before a couple’s marriage, property gifted to one individual alone and property inherited by one individual alone, provided that it is kept separate from marital funds.
With that said, regardless of whether a couple opts to resolve their differences out of court or needs a judge to intervene, real estate concerns are usually resolved in one of the following ways during divorce:
Sale
One common option is to sell real estate and split the proceeds. This can be a straightforward way to sever financial ties and provide both parties with liquidity to move forward. However, selling may take time, especially if the property market is slow or repairs are needed to attract buyers. As a result, it may be necessary to negotiate a specific approach to managing those realities until everything is settled.
Sole ownership
Another option is for one spouse to keep the property while the other receives a financial offset. For example, the spouse keeping the house may refinance the mortgage to remove the other spouse’s name and compensate them for their share of the equity.
Continued co-ownership
In some cases, divorcing couples may choose to retain joint ownership of property temporarily. This arrangement is common when children are involved, allowing them to remain in the family home until they reach a certain age. Co-ownership requires clear agreements on responsibilities for mortgage payments, maintenance and eventual sale terms to avoid future disputes.
If you and your spouse are going your separate ways and you co-own real estate of any kind, know that the process of managing this reality can be complex. Thankfully, seeking legal guidance and support proactively can help you to safeguard your interests, no matter how you ultimately choose to move forward.