By James S. Margulis, Esq.
The above article is a terrific summary of the issues that arise with regard to the distribution of your marital residence in a divorce proceeding.
You must have excellent representation in order to protect yourself with regard to the division of the same and in order to protect your credit moving forward.
The primary issue to address is whether or not the residence is going to be sold. In these challenging economic times, it is often not realistic for one party to take over the marital residence. It is most common to sell the marital residence, pay off the marital debt and equally distribute the net sale proceeds – assuming there is enough equity in the property to accomplish the same. Of course, the sale of the residence presents its own set of prickly issues. It is critical that the procedure with regard to the sale of the residence is set out in very specific procedures in the Separation Agreement. The issues that must be addressed are repairs, payment of the same, payment of mortgage during pendency of sale, sales price, proper reductions of sales price and maintenance during the pendency of the sale. I have seen a case where the Husband was responsible for the payment of the mortgage during the pendency of the sale, yet the Wife was living in the residence with the children. The Wife did all she could to delay the sale (i.e. kept the house messy, interfered with showings etc.). This placed the Husband in a precarious position. Thus, it is essential that these issues are directly addressed so this type of situation does not arise.
If, in fact, one party is going to take over the residence, it is critical that the loan and title issues are handled in a clear, straight forward manner. If one party is responsible for re-financing the loan, it is critical that the other party has protection relative to this – first, the latter party should not execute the quit-claim deed until said re-financing is complete. Further, there should be strong language in the Separation Agreement that the former party holds harmless and indemnifies the latter party from said liability. Of course, this is only limited protection because the Lien Holder can still come after the latter party. Ultimately, the latter party can enforce the "hold harmless and indemnification" clause against the former party, but this is a separate court action which can be a painful process. Before agreeing to this, the latter party should carefully review the financial disclosures of the former party and properly make a determination as to whether the former party will have the ability to re-finance.
These are just a few of the issues that can arise with regard to the marital residence in a divorce proceeding. Please contact the Domestic Law Team at Feldmann Nagel Cantafio & Song PLLC for all of your Family Law Needs.