Dividing the Marital Home in a Wisconsin Divorce

The marital home is often the single largest, or one of the most significant assets to divide in a divorce. Disputes over the marital home can be among the most contentious parts of a divorce. Who gets to stay in the home temporarily, who pays the expenses temporarily, who gets the home as part of the final settlement, and how to split the marital home equity are all common questions about the marital home. 

This article explains the legal issues you may face when dividing a marital home in Wisconsin and some standard practical options to resolve them. 

Starting Point: Martial vs Nonmartial Property 

Wisconsin law requires the Courts to divide the parties' marital property. Under Wisconsin Statute 767.31 subd. 1 and 2, all property of married spouses is presumed to be marital property, unless it can be proven that the asset qualifies as nonmarital property. Wisconsin Statute 767.61(2)(a) outlines assets that are the remaining assets of the individual and are not considered marital. These include: 

• Property shown to have been acquired by a party before the marriage, 
• A gift from a person other than the spouse, 
• Inheritance, including retirement accounts and accounts payable upon death, and 
• Assets acquired by a nonmarital gift or inheritance. 

The party claiming a nonmarital asset must establish how and why such an asset would not be counted towards the overall divorce settlement. 

The facts of your own case will determine if the home is: 

• A purely marital asset (example, purchased during the marriage will be 100% marital money), or 
• a nonmarital asset (example, purchased before the marriage with no existing mortgage at the time of marriage), or 
• A mixed asset (example, home purchased before the marriage, but mortgage paid down during marriage, or home purchased during the marriage with a portion of the cost paid via nonmarital money such as inheritance or a gift).  

Evidence and Documentation 

Because nonmartial tracing, determining improvement value, and valuation are fact-intensive, documentation is crucial. Purchase contracts, closing statements, bank statements showing down payments or improvements, appraisals, and mortgage history are all important.  

For example, if a party used a gift (nonmartial) to use as the down payment on a home, that party would need to provide documentation proving that the funds were a gift. It is not sufficient to testify that the funds were a gift.

The Courts would want to see clear tracing, which may include the source of the funds (a check, for example), the deposit of the funds into an individual account, and payment from that individual account to the mortgage company, proving the existence of the downpayment funds.  

Valuation and Timing 

Before a court divides assets, it must first value them. The parties or the Court will choose an appropriate valuation date, commonly the date of filing the divorce, the date of separation, or the date of trial. The facts of each case will impact the valuation date. 

The home's value will consist of the fair market value of the home as of the valuation date, minus the outstanding mortgage as of the valuation date, to determine the net equity. At times, there may also be a second mortgage, a home equity line of credit (HELOC), or other loans tied explicitly to the home that will reduce the home's equity.  

Because housing markets fluctuate, the valuation date and method of determining that value can significantly impact how much equity is in the home to divide. Professional appraisals are often the standard to determine the value of the home most accurately. Parties may also agree on the value of the home using other methods, such as property tax statements, comparative market analysis, or other means.  

Presumption of Equal Share 

Wisconsin law directs Courts to divide marital property and provides a presumption that property is to be divided equally. Courts do have discretion to make an unequal division if the statutory factors justify it. Those factors, along with the Court's broad authority, allow judges to account for a party's age, earning capacity, future needs, and contributions to the property, among other factors. 

In practice, this means the house is often handled in one of a few ways: selling and splitting the home's proceeds, one spouse buying out the other's share of the home, or awarding the home to one spouse and offsetting the share of marital equity with other marital assets.  

Common Methods 

Sell the home and divide the proceeds.

This is the easiest and most common way to dispose of the marital home. The parties do not have to fight over the home's value, as the value will be whatever the ultimate sale price is. The party keeping the home does not have to worry about refinancing or other ways to buy out the other spouse's share of the equity. This frees up cash to settle other marital debts and provide a lump sum to secure new housing. 

Buyout/Refinance.

One spouse may elect to keep the house and "buy out" the other spouse's equity in the house. This can be done by refinancing the current mortgage in their own name. Refinancing can be complicated: the spouse must individually qualify for the refinance, the home may not appraise for a value high enough to secure the buyout, or the spouse may not be able to afford the new mortgage payment after the refinance.

It is important to note that removing a spouse's name from the title and mortgage are two separate steps. A divorce judgment can award title to the home, but a divorce judgment cannot unilaterally force a lender to remove a spouse from the home mortgage. 

Award to one spouse with other assets to offset.

A court may award the home to one spouse while awarding other marital assets to the other spouse. The value of the award of the assets is intended to be equal. For example, suppose the home has marital equity of $100,000 and is awarded to one spouse. In that case, the other spouse will be awarded marital assets totaling $100,000, which may include a mix of investment and retirement accounts, as well as other marital assets. 

Co-ownership after divorce.

In rare circumstances in which the parties agree, the Courts can award the home to be co-owned by the parties after the divorce. Co-ownership can be a short-term solution, for example, co-ownership until the minor children graduate from high school. It would require clear written agreements addressing: payment of mortgage, maintenance, taxes, insurance, and triggering events that can force the sale of the home.  

Temporary Possession and Use of Home During Divorce Proceedings 

A common issue during a divorce proceeding is who gets to stay in the home. There is no hard and fast rule to determine who will get the house. Absent an agreement for a party to move out, either party may ask the Court for a temporary order regarding exclusive use and possession of the marital home. Temporary orders are enforceable and stay in effect until modified or replaced by a final divorce judgment.  

Mortgage Responsibility 

Title allocation and mortgage liability are distinct. Even if the divorce assigns the house to one spouse, mortgage lenders and other creditors can continue to hold both parties liable if both names remain on the loan(s). A mortgage is a contract between the mortgage lender and the borrower. That is why buyouts commonly require a refinance to remove a spouse's liability. Otherwise, if the party who is awarded the home (and the joint mortgage) misses mortgage payments, the other spouse will be impacted even though the home was not awarded to them. 

Conclusion

Dividing the marital home in Wisconsin requires careful statutory analysis, accurate valuation, attention to mortgage and creditor issues, and realistic planning about who will live in the home while the divorce is pending and permanently after the divorce. Contact O’Flaherty Law today to schedule a consultation. Let us guide you through the process with clear advice and trusted support.