The Marital Residence After Divorce
In a divorce situation, it is important for both parties to reach an agreement that specifically establishes a workable method to dispose of the marital residence. The idea is to separate your lives completely and start somewhere fresh.
While it should be as easy as selling the home and splitting the proceeds, it’s not always that simple. Sometimes the parties cannot agree on how to equitably divide the proceeds and/or the personal assets.
Both Parties Are Responsible for the Debt after divorce
Unless the parties agree to sell the marital residence together at the time of the divorce or separation, one party may be awarded possession and legal title to the house subject to the mortgage in both parties’ names. The party no longer having possession or title to the marital residence may be still liable for the mortgage fee until the mortgage is paid off by virtue of a refinancing or sale.
That means both parties’ credit may continue to reflect this debt after divorce and be affected by the possibility of late payments even though only one party will have the right to reside in the house. For this reason, it is important for both parties in a divorce to carefully consider their options as to potentially satisfying the marital mortgage by agreement before jumping straight into court.
What Normally Happens
Typically, it is not unreasonable for both parties to agree that the person with possession of the marital residence refinance the mortgage fee and release the other party from liability. After refinancing the home, if there is equity, the parties generally split the equity. The parties or the judge will determine the amount/percentage of the division. Keep in mind the division is not always a 50/50 split. Sometimes, depending on the circumstance, the division may be 60/40 or even 80/20.
If neither party wants to maintain possession of the home, the parties may agree to sell it and divide the equity.
To ensure that you have the most favorable outcome in your divorce proceedings, especially as it relates o equitable division of assests, it is extremely important to consult with an experienced family law attorney to avoid costly financial mistakes and extended emotional turmoil. Attorney Crystal Wright can be contacted at (404) 594-2143.