Minnesota Divorce Real Estate: Top 10 Mistakes to Avoid

Divorce can be one of the most significant financial events a person may experience, and in the Twin Cities and surrounding areas of Minnesota, the marital home is often among the most valuable assets involved. Decisions related to real estate during a divorce can carry lasting legal, financial, and emotional consequences. Unfortunately, many divorcing couples make avoidable mistakes that result in unnecessary costs, delays, and loss of negotiating power.

This article outlines the top 10 mistakes to avoid in Minnesota divorce real estate and provides practical guidance to help protect your interests.

1. Making Real Estate Decisions Based on Emotion

Divorce is an emotionally charged process, and the marital home frequently holds significant sentimental meaning. When emotions dictate real estate decisions—such as delaying a sale out of resentment or attempting to retain a property that is no longer financially viable—the result is often an unfavorable outcome.

Best practice: Approach the marital home as a financial asset rather than an emotional attachment. Objective, fact-based analysis is essential when making sound decisions during the divorce process.

2. Assuming One Spouse Can Easily “Keep the House”

In Minnesota, retaining the marital home requires more than personal preference. The spouse seeking to keep the property must generally refinance the mortgage solely into their own name and provide appropriate compensation to the other spouse for their share of the home’s equity.

Common oversight: Overestimating post-divorce income or underestimating debt-to-income ratios, which can lead to unsuccessful refinancing efforts and unnecessary delays in finalizing the settlement.

3. Failing to Obtain a Proper Home Valuation

Relying on an online estimate or an outdated market value can significantly distort settlement negotiations.

Minnesota courts and mediators typically require a fair market valuation, which is commonly established through one of the following methods:

• A formal appraisal conducted by a licensed real estate appraiser, or
  A comparative market analysis (CMA) prepared by a qualified real estate professional, such as a Certified Divorce Real Estate Expert (CDRE®) with specialized training in divorce-related real estate matters.

When a home is not accurately valued, one spouse may receive an unfair advantage, leading to an imbalanced settlement.

4. Overlooking Capital Gains Tax Implications

Selling a home during or after divorce may trigger capital gains taxes, particularly if the home has appreciated significantly.

Key considerations include:

• The federal capital gains exclusion for primary residences

• Timing of the sale relative to the divorce decree

• Allocation of tax responsibility in the settlement

Common Mistake: Dividing home equity without adequately accounting for potential tax exposure.

5. Ignoring Minnesota’s Equitable Distribution Standard

Minnesota follows an equitable distribution framework rather than a community property regime. As a result, marital assets are divided in a manner the court deems fair, which is not necessarily an equal 50/50 split.

Common misconceptions include the belief that the marital home will automatically be divided equally or that title ownership alone determines a spouse’s entitlement. In practice, courts evaluate a range of factors, including each spouse’s contributions to the marriage, the length of the marriage, and the parties’ respective economic circumstances.

6. Leaving Both Spouses on the Mortgage After Divorce

A common and significant mistake is leaving both parties on the mortgage while only one spouse continues to reside in the home.

This arrangement carries several risks, including:

• Ongoing legal liability for missed or late payments

• Potential damage to credit profiles

• Reduced borrowing capacity for the non-occupying spouse

It is important to note that executing a quitclaim deed does not remove a party’s responsibility for the mortgage obligation.

7. Attempting to Sell the Home Without a Neutral Plan

When divorcing spouses attempt to sell a marital residence without a clearly defined agreement, disputes frequently arise regarding:

• Listing price

• Repairs and staging decisions

• Scheduling and access for showings

• Acceptance of offers

These disagreements can delay the sale and materially reduce net proceeds.

Solution: Clearly define all sale-related terms within the divorce agreement, and consider engaging a neutral real estate professional with expertise in divorce transactions—such as a local Certified Divorce Real Estate Expert (CDRE®), for example, Shannon Lindstrom, CDRE® & Realtor® with RE/MAX Results—to ensure clarity, objectivity, and a smooth sales process.

8. Failing to Address Deferred Maintenance and Repairs

Divorce can often result in deferred home maintenance, with postponed repairs negatively impacting both market value and buyer appeal.

Common Mistake: Assuming repairs are “not worth the expense” without conducting a cost–benefit analysis. In reality, targeted, strategic improvements frequently deliver a strong return on investment and enhance marketability.

9. Not Coordinating with Legal and Financial Professionals

Real estate decisions during a divorce should be made through a coordinated, multidisciplinary approach.

When divorce attorneys, financial planners or CPAs (including Certified Divorce Financial Analysts, CDFA®), mortgage loan officers (such as Certified Divorce Lending Professionals, CDLP®), and real estate professionals (including Certified Divorce Real Estate Expert, CDRE® designees) are not aligned, the result can be inconsistent guidance, overlooked financial or legal risks, and outcomes that may not serve the client’s long-term interests.

10. Waiting Too Long to Address the Real Estate

Delaying real estate decisions can have significant consequences, including increased carrying costs, heightened exposure to market volatility, and prolonged emotional and financial entanglement between spouses.

In Minnesota’s evolving housing market, indecision can be particularly costly.

Divorce-related real estate matters in Minnesota require careful planning, clear communication, and informed decision-making. Avoiding these common pitfalls can help safeguard your financial future and minimize unnecessary conflict during an already challenging process.

Whether you are considering selling the marital home, refinancing, or negotiating a buyout, hiring professionals experienced in Minnesota divorce real estate can be instrumental in achieving a fair, efficient, and well-informed outcome.

If you are navigating a divorce in Minneapolis, St. Paul, or the greater Twin Cities area and require guidance with a home sale, property valuation, or buyout, Shannon Lindstrom, Certified Divorce Real Estate Expert (CDRE®), is available to assist.

Shannon Lindstrom, Realtor®, CDRE®, MILRES, MRP, VCA
RE/MAX Results – Minneapolis & St. Paul Metro
7373 Kirkwood Court No, Ste. 300
Maple Grove, MN 55369
Direct: 612-616-9714
Lindstrom_S@msn.com
Shannon@ShannonLindstromRealtor.com
www.ShannonLindstromRealtor.com
www.ShannonLindstrom.info
https://www.ilumniinstitute.com/cdre/shannon-lindstrom
www.MNDivorceRealEstateExpert.com