Selling Your Hudson Valley Home During Divorce — Fast, Clean, Certain

How New York Treats the Marital Home

New York is an equitable distribution state. Under Domestic Relations Law §236(B), property either spouse acquires during the marriage is marital property no matter whose name is on the deed, and the court divides it in whatever way it finds fair after weighing a list of statutory factors. In a long marriage fair often lands close to equal, but it does not have to.

Marital property stops accumulating once a separation agreement is signed or a matrimonial action is started. Property one spouse owned before the wedding, or received by inheritance or as a gift from someone other than the other spouse, is generally separate property. A house can be partly both. If one of you owned it before the marriage and marital money later paid down the mortgage or paid for an addition, the increase in value produced by marital funds or effort can be treated as marital. Untangling that is your attorneys' job, and it is one reason the house is so often the most contested asset in a divorce here.

The factors the court weighs include the length of the marriage, each spouse's age, health, income and property, and the need of a parent with custody of the children to live in or own the marital residence. That last factor is why a parent with young children sometimes keeps the house for a period instead of selling it straight away.

Where Your Case Is Heard

A New York divorce is decided in the Supreme Court, the state's general trial court, not in Family Court. Each of our three counties has its own:

• Westchester County Supreme Court, at the county courthouse in White Plains.
• Rockland County Supreme Court, at the courthouse in New City.
• Putnam County Supreme Court, in Carmel.

All three belong to the Ninth Judicial District. New York has allowed no-fault divorce since 2010. Under DRL §170(7), one spouse can state under oath that the marriage has been irretrievably broken for at least six months, but the court will not grant the judgment until property, support and custody questions are settled by agreement or decided by the judge. The house is usually one of those questions.

The Automatic Orders: Why Neither Spouse Can Sell Alone Once a Case Is Filed

Filing a divorce in New York triggers a set of automatic orders. They bind the spouse who files as soon as the case is filed, and the other spouse once served with the summons. Among other things, they prohibit either of you from selling, transferring, encumbering or otherwise disposing of property outside the ordinary course of life unless the other spouse agrees in writing or the judge permits it, and from running up further borrowing against a credit line secured by the family residence.

The orders do not stop a sale. They mean the sale has to be agreed to in writing by both of you or approved by the judge. In practice the attorneys write the terms into a stipulation: the price or how it will be set, who holds the proceeds, and how the money is released. The orders protect you too. A spouse who quietly takes a loan against the house or tries to sell it without consent is violating a court order.

Who Has to Sign the Deed

A buyer's title insurer will want every owner of record to sign. Most married couples in New York who buy a home together own it as tenants by the entirety, a form of joint ownership only spouses can hold, and conveying it takes both signatures. If only one of you is on the deed, the other still has a marital interest the court will account for, and while a case is pending the buyer's attorney may ask for the other spouse's written consent or a court order before closing.

The mortgage is a separate matter from the deed. If only one spouse signed the note, only that spouse is personally liable on the loan. Either way, a divorce judgment does not remove anyone from a mortgage; only repaying the loan or a release from the lender does that. A sale pays the lender in full at closing, which is the cleanest way to end shared liability.

If One Spouse Will Not Cooperate

Sometimes one spouse wants to sell and the other will not sign. Every route from there runs through your lawyers:

• Ask the matrimonial judge. The court can decide what happens to the house as part of equitable distribution, including directing a sale. Judges are generally cautious about ordering a sale before the final judgment, but it can happen, for example when neither spouse can afford to keep carrying the house.
• Partition after the divorce. A divorce ends a tenancy by the entirety, and the former spouses then generally own the house as tenants in common. Either co-owner can bring a partition action in Supreme Court asking for the property to be sold. Partition is slow and costly, and a court-ordered sale is usually run by a referee at public auction, where prices tend to fall short of a negotiated sale. Our article on partition actions when co-owners disagree walks through the same procedure from a family-estate angle.
• Enforcing a judgment. If a spouse ignores a judgment that directs a sale, the court has tools to enforce it, up to having someone else complete the sale.

None of these is quick. When the two of you can agree on the sale while still disagreeing about everything else, a negotiated sale almost always leaves more equity for both.

Exclusive Occupancy: Who Lives There Until It Sells

A New York court can grant one spouse exclusive use and occupancy of the marital residence while the case is pending. Judges usually do so when it is needed to protect someone's safety or the property, or when one spouse has already set up another home and a return would be disruptive. An order of protection can also require a spouse to stay away from the house. None of this changes who owns the house. It changes who lives there, who covers the day-to-day costs, and how access is arranged.

If you are thinking about moving out, speak with your attorney first. Leaving does not surrender your ownership share, but it can bear on things like temporary custody and who stays in the house until the case ends.

Occupancy also shapes how a sale works. A traditional listing depends on the spouse who is living there keeping the house ready for showings, which can be a lot to ask. A direct sale needs a single walkthrough, arranged through whoever the attorneys agree on. And if the spouse in the house needs a few weeks after closing to move, a post-closing occupancy period can be written into the contract, as explained on our sell now, move later page.

Taxes on the Sale

Transfer taxes

A sale to an outside buyer carries the New York State transfer tax of $2 per $500 of the price (0.4%), which the seller customarily pays, plus a municipal levy for homes inside Yonkers, Mount Vernon or Peekskill city limits. At a price of $1 million or above, the buyer separately owes the 1% mansion tax. Our guide to the cost of selling in Westchester and the Hudson Valley has the current city rates. If Simply Sold RE is the buyer, those taxes and the closing costs are on us, so they never reduce the amount the two of you divide.

The federal home-sale exclusion

Under Internal Revenue Code §121, someone who both owned the home and used it as a main residence for at least two years out of the five leading up to the closing can exclude up to $250,000 of gain, or up to $500,000 on a joint return where both spouses meet the use test. Divorce brings two special rules worth raising with your tax adviser:

• The spouse who moved out. If one spouse leaves and the other is granted use of the house under a divorce or separation instrument, the spouse who left is treated as still using it as a residence during that period. That can preserve the absent spouse's exclusion when the house is sold later.
• A transfer between spouses. If the house passes from one spouse to the other as part of the divorce, the receiving spouse's ownership period includes the time the other spouse owned it. Section 1041 generally treats a handover from one spouse to the other in a divorce as a non-taxable event, but the receiving spouse keeps the original cost basis, so the built-in gain comes along with the house.

That makes timing matter. A closing in a year when you can still file jointly may use the $500,000 figure; once you file separately, each of you measures your own share against $250,000. With house values in much of Westchester and Rockland, the difference can be large. Speak to your accountant before you choose a closing date.

Where a Direct Cash Sale Fits the Divorce Timeline

A direct sale is not right for every divorcing couple. With time, cooperation and a house that shows well, a listing may bring a higher price. A direct sale tends to fit when:

• The settlement is done or close to done, and the only open item is turning the house into money both attorneys can divide.
• The house needs work neither spouse will pay for, and nobody wants a run of showings while one of you still lives there.
• Carrying the house is draining the marital estate, with the mortgage, a school tax installment and insurance still due every month.
• The closing has to line up with a settlement conference, a move or the end of a school year.

We do not take sides, and we do not advise either spouse on the settlement. Sellers across Westchester, Rockland and Putnam rate us 4.9 from 75 Google reviews, which you can read on our reviews page.

If you want a sense of what the house could bring on the open market as well, our Westchester, Rockland and Putnam county pages cover local conditions town by town.