SELLING THE FAMILY HOME AND DIVORCE
The family home is commonly the biggest asset in a divorce case. Sadly, in these economic times the family home can be a troublesome area when it comes to divorce. In the good old days, the home would be sold quickly and each party would have a nice pot of equity to restart their lives. Today, a lot of family homes are upside down and no equity is to be had.
There are different options that can be examined in a divorce situation. One option would be for one of the spouses to remain in the family home making the mortgage until the home is no longer upside down. Sometimes, one spouse does not have the financial resources to make the entire payment. It would be beneficial for the other spouse to chip in on the house payment until the home can be sold. It is a marital asset along with a marital debt. I have had some couples who have had to reside in the home together even though they have separated. This is emotionally difficult but sometimes it is the only option. You may see if there are any relatives and/or friends that would like to go in on a real estate investment and help with the mortgage in exchange for part of the profit when the home sells. I have had some clients who have secured roommates to make the mortgage payment. As a last resort, some couples end up having to give the house back to the bank. My understanding is that a short sale is better than a foreclosure but I would encourage anyone in this position to speak with an experienced realtor and a bankruptcy attorney.
Often, one party will ask to be taken off the title but if you are on the bank loan then you are responsible for the debt even if the divorce judgment states the other party is awarded the house. The mortgage company cares who is signed onto the loan and they don’t go by what the divorce judgment states. That is why it is important that if one spouse takes the family home that the family home is refinanced into their name so the remaining spouse is under no financial obligation. Often, a refinance can’t occur right away and both spouses must make sure that house payment is being paid monthly or both parties can be thrown into default. It won’t work to say, “I thought my ex-wife was making the monthly payment”. Please see a family law attorney for any questions you may have regarding your specific situation. Family law attorneys are coming up with some creative solutions in these troubled times.