Selling Your House During a Divorce in Alabama

If both spouses are on the deed, both must sign to sell. That part is obvious. Less obvious: in Alabama, even when only one spouse is on the title, a married person generally cannot sell or mortgage the family homestead without the other spouse's signature and assent (Ala. Code § 6-10-3). That is why closing attorneys ask about marital status at every closing.

So in most divorces, a sale needs both of you, or a court order or final judgment that settles who owns the house and who can sign. If one spouse will not cooperate, that is a question for your divorce attorneys and the court. A buyer cannot solve it.

The mortgage matters as much as the deed. A divorce judgment can say which spouse must pay the loan, but it does not change the loan itself. If you both signed the note, the lender can still look to both of you until the loan is paid off or refinanced. A sale that pays the loan in full is the cleanest way to get both names off it.

• Sell now, during the divorce. Both spouses sign the contract. The proceeds can be split at closing or held until the court decides. This ends the shared mortgage payment and takes the biggest asset out of the argument.
• One spouse buys out the other. The spouse keeping the house refinances into their own name and pays the other their share. This works only if that spouse can qualify for the new loan alone.
• Keep it jointly for a while. Some couples keep the house until a child finishes school. Both names stay on the mortgage, so one person's late payment hurts both credit reports.
• Sell after the divorce is final. The judgment spells out the terms. You avoid arguing twice, but you carry the house longer.

Alabama divides marital property equitably under Ala. Code § 30-2-51, which means fairly, not always half and half. How the sale money gets divided is decided by your agreement or the court, not by the buyer.

At closing, the title company or closing attorney pays off the mortgage, any home equity line, other liens, and back taxes first. What is left is the net proceeds.

Your agreement or court order controls what happens next. Common setups:

• split by a set percentage, with separate checks or wires to each spouse,
• held in escrow or an attorney trust account until the court rules or you both sign an agreement,
• adjusted for one spouse having paid the mortgage alone during the separation, if your agreement says so.

Give the closing attorney a copy of the signed agreement or order early, so the settlement statement matches it and nobody is surprised at the table.

Alabama requires at least 30 days between filing the divorce complaint and a final judgment (Ala. Code § 30-2-8.1). Contested cases take much longer. A house can sell at any point along the way, as long as both spouses sign or the court authorizes it.

Reasons to sell sooner:

• neither of you can afford the payment alone,
• the mortgage is behind or about to be,
• the house needs repairs neither of you will pay for,
• you both want a clean break and a known number to divide.

Reasons to wait: the house is in good shape and will show well, and you have the cash flow to carry it while it sells on the open market.

If one spouse has already moved out, keep the insurance, utilities, and lawn care going until closing. A neglected house loses value, and the loss comes out of both shares.

Under federal rules, if you owned the house and lived in it as your main home for at least two of the last five years, you can generally exclude up to $250,000 of gain each on separate returns, or up to $500,000 on a joint return if you both meet the residence test. If you have to sell before you meet the two-year tests, IRS rules allow a partial exclusion when the sale is because of divorce or legal separation. A tax professional can tell you how this applies to your case.

A listing during a divorce means two people agreeing on a list price, repairs, showings, every offer, and every repair request. That is a lot of decisions for people who are not getting along.

A cash sale cuts those decisions down to one: accept the number or not. We usually make a cash offer within about 24 hours. There are no showings, no repairs, no cleaning, and no commission, and we cover the normal closing costs. You pick the closing date, and we can close in as little as 7 to 14 days through a local title company or closing attorney. The mortgage and liens are paid off at closing, and the net goes where your agreement or court order says.

Our offer will usually be below a full retail price after repairs. Weigh that against a fixed date, no more shared payments, and one less thing to fight about. Before you sign anything, run it by your divorce attorney. This page is general information, not legal advice.