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 or if one of the parties should retain the home. For example, if a home was inherited by one of the parties or purchased before the marriage and has not been jointly titled, the court will usually agree that the home is “Separate Property” and does not have to be divided between the parties. See O.C.G.A. § 19-3-9 – Each spouse’s property separate.
However, this article will generally be a discussion of real property and homes purchased during the marriage, and subject to equitable division at the conclusion of a divorce. What will happen to the marital home in a divorce 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 not be feasible for either party to financially maintain the home. This usually includes making the mortgage payments, paying the property taxes, paying the insurance, utilities and paying for maintenance. If this is this case, usually the best option is for the parties to agree to sell the marital home and divide the equity.
However, even the selling and division of equity in a marital residence is not always easily resolved. For example, depending on the situation, there could be several ways in which the equity in home can be divided. The parties could decide to pay off debts incurred during the marriage, or just divide the equity with no strings attached. In addition, if the parties do not want to sell the property immediately following a divorce, they can agree to retain it for a period of time, and agree to a deadline in the future for the home to be sold. On the other hand, if either party can afford to keep the home, the parties can decide that one or the other gets the home at the conclusion of the divorce. However, this may also require the person keeping the home to refinance the mortgage for the marital residence if both parties are obligated to the mortgage.
However it is important to note, that 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 and the equity divided. This can be whether or not either party has enough income to make the mortgage payments. So if the parties cannot agree how to divorce the equity in a marital home, this is what the court will usually do for them.
What determines if I can retain the Marital Residence?
The present estimated value of the house, the mortgage, and any other liens are 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 determined during the actual sale of the home, or can be inferred from comparable sales, speaking with a real estate agent, paying for an official appraisal, and reviewing estimated values from various sources. In any event, it does not usually hurt to also list a home for sale and see what offers come in from potential buyers.
The current market for residential real estate is the determining is also a determining factor on whether or not one of 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 and expenses of the sale, then the parties should consider the possibility of a short sale or postponing the sale of the home until the real estate 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, then the other spouse may may have to refinance the home to remove their spouse from the mortgage, and to possibly buy out their spouse’s agreed amount of equity. Even if the responsibility for paying a mortgage is agreed to in a Divorce Settlement Agreement, the mortgage lender is still not obligated to rewrite the loan and take either party off the mortgage. The only way to effectively remove one party from a mortgage (and/or Home Equity Line of Credit) is to refinance the loan(s). If refinancing is not a possible, then the home may need to be sold and the net equity divided.
What to Know about Refinancing a Marital Home
Refinancing is not necessary following a divorce. Refinancing a loan or mortgage does not affect the mortgage lender’s ability to pursue either party that is on the loan for its timely payment. In other words, if the home is retained by one party and not refinanced, then the party that gave up the home in the divorce may still be pursued by the lenders to make payments for the financial obligation. In addition, the remaining obligation for the mortgage loan usually prevents the party giving up the home from acquiring a loan on a new home. This is because the other mortgage (for better or for worse) will still be reported on their credit report as an existing debt obligation.
In many cases a non-owner will only be able to receive a new loan until the joint account is paid off in full or refinanced by the ex-spouse. This is why most courts require a marital home to either be sold, refinanced, or paid off by the party retaining the home if both parties are on the mortgage. In addition, the court will usually want an agreed date for the home to be sold or refinanced to be included in a Divorce Settlement Agreement. The refinance of the marital home is by the party keeping the home is usually necessary for the party giving up the home to be approved for a mortgage of their own following a divorce.
Do I Have to Sell the Marital Home 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 the marital home, but the market isn’t looking good for selling, you and your spouse can agree to sell the home at a later date. This can be as little a year later or over ten (10) years later. While these agreements are subject to being rejected by the court, it has been our experience that most courts will approve these agreements so long as they are feasible and reasonable.
In other words, the parties can agree retain the marital property until a later date when the property will likely sell at a higher price. However, the court will rarely approve an open ended agreement for a home to be refinanced or sold “at a later date” without some type of deadline agreed to in writing.
Also, the parties can agree to share the expenses for a marital home until an agreed later date, the home is sold, or it is refinanced. This is quite common in cases where the parties may wish to sell the marital home only after the minor children reach a particular age or life milestone, such as graduating from high school or college.
If you are facing a divorce and need assistance dividing a marital residence or other real property, call us at 770-609-1247 to discuss your case with one of our experienced divorce and real estate attorney. Contact >
Updated: 2020-08-12
