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Who Keeps the Marital Home After Divorce?

Who Keeps the Marital Home After Divorce?

The most valuable asset in most divorce cases is the marital home. Many assume that means that it is one of the most highly contested, but couples that are in the midst of divorce and their legal counsel can be shockingly cavalier about the house in a property settlement. The same is true of the mortgage on the home. In most instances, the debt owed on the marital home is the largest shared liability between the divorcing couple, yet minimal thought is given to obtaining a settlement or terms in the divorce decree that offer protection for the spouse relinquishing ownership in the event that the spouse retaining ownership does not follow through in a timely manner on agreements to refinance or sell.

The Marital Home & Divorce: 3 Common Circumstances

  1. When One Party Keeps the Marital Home: When one of the two parties involved in the divorce will be keeping the marital home, the settlement should determine a date to serve as a deadline for the refinancing of the property in order to remove the opposing party’s name from the mortgage. The settlement agreement should also determine the process and deadline for the party not keeping the home to move out and the transfer of the property’s title. In this situation, the party keeping the marital home typically buys out the other party’s equity. In some instances, specific stipulations can be put in place. One example would be a divorcing couple agreeing that one would remain in the marital home until the minor children reach the age of eighteen. At which point, the home would be sold so that equity could be divided. Contingencies such as this can be put in place in the agreement in order to accommodate the specific situation of the divorce case.
  2. Selling the Marital Home: Some property settlement agreements require the sale of the home with the equity from the sale to be divided between the two parties. This is usually the easiest method of division. The only confusion can come when the divorce decree designated one party as responsible for listing, showing and selling the property with the other continuing an obligation to pay part or all of the mortgage payment and contribute towards everyday costs of maintenance, etc. until the sale is completed. In this instance, the party responsible for selling the home may not be very invested in a quick sale. To remedy this potential problem, wording can be included that describes in detail what each is responsible for throughout the process in order to facilitate a timely sale. If possible, a timetable should be agreed upon and contingencies put in place if that timeline isn’t met.
  3. Financing Problems: One of the biggest problems with the marital home during a divorce comes when one spouse is awarded the home on the contingency that they refinance to remove the other spouse’s name from the mortgage and they fail to follow through on the terms of the order. In many cases, nothing in the order specifically addresses this situation. There is no date by which the refinancing must be completed, there are no consequences listed for failing to abide by the terms, etc. In this situation, the spouse who did not retain the marital home can execute a quit claim deed in favor of the spouse who was awarded the home. This gives that spouse sole title. Yet this will often leave the spouse who filed the quit claim deed unable to obtain financing to buy a new home because the previous home’s mortgage was not refinanced. In worst-case scenarios, the spouse retaining the marital home may stop paying the mortgage and allow the home to go into foreclosure. The missed/late payments and the foreclosure proceedings will show up on the credit report of both parties. Getting the refinancing issues worked out prior to the completion of the divorce is the only way to guarantee these problems won’t occur. Yet specific wording and provisions in the agreement can also go a long way towards alleviating this type of issue.
If you have additional questions, regarding your home as a marital asset or how the Arizona divorce court handles the division of marital property, please get in touch with the Arizona divorce lawyers at Arizona Family Law Attorneys. We can assist you in determining your best course of action.
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