Divorce: What Happens to the Marital Residence?

Determining what should happen to the marital residence during or after a divorce is a difficult task. It is not always clear if the parties should sell the marital residence / home or if one of the parties should retain the home. What happens to the home in this process is not so much determined by the parties, but more often is determined by the financial circumstances of the parties. It some situations it will be non-feasible for either party to solely maintain the house in which case the best option would be for the property to be sold and divided. Even in selling the property the matter is not always easily resolved as there are a number of ways in which the property could be disbursed and how particular debts could be repaid following the dispersal. Overall and in general, however, if the parties intend on selling the property in the near future, even if they retain it, the best option is to sell the property at the most convenient time for the parties.

However, it is important to note:  If the parties ultimately cannot decide between themselves what to do with the marital residence or with the help of their attorneys, a Superior Court Judge will review all the facts and evidence in the case and decide for the parties.  It is not uncommon for the Court to order a home sold if neither party has enough income to make the mortgage payments or if the parties are arguing about the equity in the marital residence and how to divide it.

What determines if I can retain the Marital Residence?

The present estimated value of the house – the mortgage/ or loan is the prominent factor determining if retaining the home is a possibility. In many situations this option is not feasible by only one of the parties. In many situations it is impossible to predict the correct value of the home and whether or not selling the home will actually cover the amounts of money owed on the mortgage or loans. The Sale price of a home is only determinable during the actual sale as past sale prices, money spent on renovations, and estimates of current price value by tax estimates are not able to approximate the exact value of the home. The current market is the determining is also a determining factor on whether or not the parties may be able to retain the marital home. If the home is marketable and the sales price is not estimated to cover the current mortgage fees/ or loan then the divorcees should consider the possibility of a short sale or may even consider to post pone the sale of the home until the market improves. If one party is able to retain the home then an appraisal of the property may give a more accurate determination of value. In the event that one party retains the home the other spouse may transfer the loan or mortgage to the other spouse. Even if the responsibility is transferred this does not transfer the marital debt. The only way to effectively remove one party off of the mortgage or loan is to refinance. If refinancing is not a possibility for a sole party then retaining the house isn’t an option.

What to Know about Refinancing:

Refinancing isn’t necessary following a divorce. Refinancing a loan or mortgage does not affect the lenders/ banks’ ability to pursue the other spouse/ ex-spouse for payment of said obligation. In other words if the home is retained by one party and refinanced then the ex-spouse may still be pursued by the lenders to make payments for the financial obligation. In addition the previous loan may prevent the non-owner from acquiring a loan on a new property. In many cases a non-owner will only be able to receive a new loan when the joint account is paid off in full or refinanced by the opposing party. Refinancing is a positive way for parties to maintain the ability to receive future credit options and move on while the debt maybe repaid by either or both of the parties following a divorce.

Do I Need to Sell Now?

You are the only person who can determine if you need to sell your property now; however, you may be advised on the matter by a financial consultant or other financial professional. If you need to sell, but the market isn’t looking beneficial or you need to sell, but you want to sell at a later date it is possible to retain the marital property until the property is ripe to sell. The marital property could technically be retained indefinitely until a buyer is interested so long as the financial obligations are accounted for; such as, mortgage, loans, taxes, insurance, home owners association fees, repairs, etc. Negotiations between the parties can be reached at how financial obligations can be divided in this case so that the marital property may be retained. In some cases the parties may wish to sell the property after the minor children reach a particular life milestone and intend to sell the property following that particular point. In a final judgment or decree a judge may state that the property is to remain marital until the point of sale at an approximate date following the milestone. For parties whose objectives are to meet the milestone selling later tends to be a reasonable option- which can also lead to the mortgage being paid off or for the housing market to improve. In the case of, staying or selling, the decision is subjective to your particular financial situation and various financial factors may determine your ability to stay or go. An attorney or financial legal advisor may advise you on the best options for your situation and provide reasonable solutions for the handling of either choice.

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