Half Built Homes and Divorce

During a divorce, decisions regarding the marital home often involve difficult financial and emotional considerations. The divorcing couple must decide whether one person will stay in the home, whether the home will be sold, and, regardless of the disposition, will need to agree on the current fair market value. When the home in question is half built or otherwise unfinished, this process can become much more complicated.

Consider the following scenario:

Half Built Homes and Phoenix Divorce MediationJohn and Laura, a married couple, have been creating their custom-built house. They originally bought the land for $300,000. The land itself is an irregularly shaped lot, larger than any of the surrounding lots. The home is not yet finished, and the couple has suspended plans to finish the home because they have decided to file for divorce. John and Laura need to know how to value the property as part of their division of community assets.

In the scenario above, John and Laura would benefit from meeting with a professional mediator, in order to make informed decisions about their half-built house. They will first need to determine the value of the home, and then decide how to allocate this value between them. They will also need to agree on the disposition of the home (whether/when it will be sold, whether one of them will remain in the home, or another outcome).


It can be difficult to determine the exact value of a home that is unfinished. A good place to start may be to research comparable properties within a couple of miles of the property. In order to do this, you can consult with a real estate agent or appraiser. It is important to make sure that that the details of the homes are similar, such as number of bedrooms/bathrooms and style of the homes. Then, you can determine the average price of these comparable properties. If the home or lot does not have comparable properties in the area, such as in the case of John and Laura, this may require considerably more research. However, with the help of a skilled and experienced mediator, and consultations with knowledgeable real estate professionals, John and Laura will be able to gather the information needed to make fully informed decisions as to what feels fair and reasonable in regards to value.

Once John and Laura agree on the current value of their home, they will then need to determine the cost to finish their home. In determining the cost to finish the construction, it can be helpful to have a professional inspection of the property with a licensed home inspector. The inspector can make sure that John and Laura are including all items and tasks that will need to be completed before the home is finished. It is important to get an accurate cost to have the unfinished areas of the house completely finished so that they will pass inspection and meet local codes. This includes the costs of material and labor, so they may need to get estimates from contractors as part of this process.

Next, John and Laura can deduct the agreed-upon cost to finish the home, from the agreed upon value of the finished home, to get a rough estimate of the value of the unfinished home.


John and Laura will need to agree on the disposition of their home. Will one of them remain in the house? Will they attempt to sell it unfinished? Will they agree to complete the home and then sell it once it is finished? In order to make a fully informed decision, it will be important for them to consult with knowledgeable real estate professionals. Attempting to sell an unfinished home can be difficult, as many buyers have reservations about purchasing a home with many unknowns (ie. what will be the exact cost to finish it, is everything constructed to code, etc.?). Another potential hurdle is that the buyer will need a construction loan (typically requiring 20-25% down). Lenders can be hesitant about construction loans, as it may be seen as a risky investment given the many unknown variables that often occur during home construction. For this reason, lenders usually require many details about the property before approving the loan.

Whatever Laura and John’s decision regarding the valuation and disposition of their home, it is important that they consult with professionals in order to make fully informed decisions. Having an agreed-upon current value of the home, and an informed estimate regarding costs to complete the home, is an essential part of this process. Though the decisions to be made by the couple can be difficult, with the help of a skilled Phoenix mediator and consultations with knowledgeable professionals, the couple can more easily and quickly come to agreements that make the most financial and emotional sense for them both.

Author Oliver Ross Mediator

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