Understanding the Legal Framework Around the Marital Home

Michigan has a legal framework around what happens to the house in a divorce.

Most people don’t understand it.

And that lack of clarity is where costly mistakes get made.

Watch: What Happens to the House in a Michigan Divorce

For homeowners in Oakland County and throughout Southeast Michigan, the marital home is often the largest financial asset involved in a divorce. It is also the most emotional one. When financial structure and personal history collide, decisions can get rushed — or made without full information.

Before anything is finalized, you need to understand how Michigan law approaches the marital home and what your real options look like.

Is Michigan a 50/50 Divorce State?

Michigan is not automatically a 50/50 state.

Michigan follows a legal standard called equitable distribution, which means marital property is divided fairly — but not necessarily equally.

Courts may consider:

• Length of the marriage

• Earning capacity of each spouse

• Financial contributions

• Non-financial contributions, including raising children

• Health and age

• Future financial need

“Fair” does not automatically mean equal. Every case is fact-specific.

Is the House Marital Property?

In most cases, if the home was purchased during the marriage, it is considered marital property.

Even if:

• Only one spouse’s name appears on the deed

• Only one spouse’s name appears on the mortgage

If marital income was used to pay the mortgage, build equity, or make improvements, that equity is typically part of the marital estate.

If the home was owned before the marriage, inherited, or gifted, classification may differ — but appreciation during the marriage can still become part of the discussion.

This article is educational guidance based on Michigan real estate practice — not legal advice. Every divorce is unique, and you need to consult a qualified Michigan divorce attorney regarding your specific situation.

How Is Equity Calculated?

Equity is not an online estimate.

Equity is calculated as:

Current market value
minus
Mortgage balance
minus
Any outstanding liens

From there, selling costs must also be considered if the home is going to market. Those may include:

• Real estate commissions

• Transfer taxes

• Title and closing fees

• Repair credits

• Attorney fees

Understanding true net equity is critical before making any decisions.

The Three Most Common Outcomes

In Michigan divorce cases, the marital home typically goes one of three directions.

1. Sell the Home and Divide the Equity

For many couples, selling is the cleanest financial reset.

The home is listed, marketed strategically, sold, and net proceeds are divided according to the divorce agreement.

But strategy matters.

Pricing, negotiation structure, and discretion all impact outcome — especially in markets like Royal Oak, Birmingham, and throughout the Woodward Corridor.

Divorce sales require privacy.

The reason for sale is not legally required to be disclosed. Buyers and buyer agents may ask why the property is being sold, but that information is not necessary to determine value.

Maintaining privacy protects leverage.

Protecting the net proceeds is critical, as those funds often determine where at least one spouse will live next.

This is where having an advocate matters.

An advocate protects equity, privacy, and communication structure throughout the transaction — especially in situations where both sellers may not be speaking.

Divorce transactions must be handled with professionalism and care from start to finish.

In some cases, one spouse may need their share of the net proceeds to purchase their next home. That requires coordination of timing and access to funds — which is a separate conversation that can be addressed independently.

2. One Spouse Keeps the Home

Sometimes one spouse chooses to remain in the home.

This typically requires refinancing the mortgage into one name.

Lenders will evaluate:

• Income

• Debt-to-income ratios

• Credit score

• Employment stability

• Appraised value

The mortgage payment alone does not determine affordability.

You also need to consider:

• Property taxes

• Insurance

• Utilities

• Maintenance reserves

• Future repair costs

Property tax implications in Michigan may shift depending on how ownership transfers. That needs to be reviewed before agreements are finalized.

Keeping the home can provide continuity — but it must be financially sustainable.

3. Delayed Sale or Temporary Arrangement

In some cases, couples agree to delay the sale.

This may be structured around school timing, refinancing feasibility, or financial planning.

If this path is chosen, the divorce agreement must clearly outline:

• Who pays the mortgage

• Who covers property taxes

• Who handles repairs

• What triggers the eventual sale

• What happens if payments are missed

Clarity prevents future conflict.

Where Costly Mistakes Happen

The biggest mistakes occur when decisions are made without structure.

Common issues include:

• Failing to calculate true net proceeds

• Agreeing to refinance without lender confirmation

• Ignoring property tax implications

• Selling under urgency without reviewing market conditions

• Disclosing personal circumstances during negotiation

When you have accurate valuation, lender clarity, tax awareness, and local market insight, the decision becomes strategic instead of reactive.

Timing and Tax Considerations

Divorce intersects with tax law.

Capital gains exemptions may apply depending on timing.
Filing status changes can impact deductions.
Ownership transfers may affect property tax treatment.

Sequence matters.

Coordination between your attorney, tax professional, and real estate advocate matters.

Final Perspective

The house decision during divorce does not need to be rushed.

It needs to be structured.

When you understand the legal framework, the financial numbers, and the local market conditions, clarity replaces fear — and strategic decisions create stability.

Understanding what happens to the house in a Michigan divorce is the first step toward protecting your equity and your next chapter.

AUTHOR

Lisa A. Mills
Signature by Lisa | National Realty Centers
Powered by JMG

110 Willits St
Birmingham, MI 48009
Call/Text: (248) 953-6400
www.signaturebylisa.com

Frequently Asked Questions About Divorce and the Marital Home in Michigan

What happens to the house in a divorce in Michigan?

In most cases, if the home was purchased during the marriage, it is considered marital property and divided under Michigan’s equitable distribution standard. The home may be sold, refinanced by one spouse, or temporarily retained under a structured agreement.

Is Michigan a 50/50 divorce state?

No. Michigan follows equitable distribution, which means property is divided fairly but not necessarily equally. Courts consider multiple financial and non-financial factors.

If only one spouse’s name is on the deed, does the other spouse have rights?

Often yes. If the home was acquired during the marriage or marital income contributed to mortgage payments or improvements, equity may still be considered marital property.

Do we have to sell the house during divorce?

No. Couples may sell, negotiate a buyout, or structure a delayed sale agreement depending on financial and legal considerations.

How is home equity calculated in divorce?

Equity is calculated as the current market value of the home minus the mortgage balance and any liens. If selling, transaction costs must also be considered to determine net proceeds.

Can one spouse buy out the other?

Yes, typically through refinancing. The spouse keeping the home must qualify independently under lender guidelines and compensate the other spouse for their share of equity.

Should we sell before or after the divorce is finalized?

That depends on tax implications, financial planning, and legal strategy. Timing can affect capital gains exemptions and division structure.