Often one of the largest assets a divorcing couple has is the marital home, and deciding what to do with it after a divorce can often be one of the most contentious and emotional issues that must be overcome to resolve the case.
Many individuals preparing for or going through a divorce may feel that they want to stay in the marital home when all is said and done. Whether for sentimental or practical reasons, not everyone is in a mad rush to cash out whatever equity remains and start fresh. But many clients put this item on their “wish list” without understanding what it would actually take in order to make their dream a reality, and this issue was recently tackled by Lisa Prevost in a New York Times article, “Divorce and the Shared Mortgage.”
Staying in the marital home after your New Jersey divorce brings up several issues:
First, you must consider whether or not you can afford to maintain the property on your own. This would potentially entail keeping up a mortgage, property taxes, homeowner’s insurance, utilities, maintenance, and repairs. This may not be an easy answer for you to arrive at, as there can be a lot of unknowns about your future financial circumstances while you are trying to make this determination, especially if alimony will be involved in your case and the amount you will receive or have to pay has not yet been determined.
Next is whether or not it is possible to obtain the necessary financing to either pay off the mortgage or to take over the present mortgage obligation (and get your spouse’s name off the mortgage), and then buy out your spouse’s equitable share in the home. If you are going to be the one receiving alimony, often financing will be unobtainable until you can show several months’ worth of alimony being paid to you, and not every spouse will be willing to delay receiving their equity and potentially remain on the mortgage (and thus on the hook, legally, for the home) until their name can come off the mortgage
Another important consideration that is often minimized is how the buyout will be effectuated. Often there will be more than one way to effectuate the buyout, but some options are not the most desirable to the party being bought out. If the deal is not attractive, than it may be dead in the water. Your best chance of remaining in the property that would otherwise be sold by the Court after trial is to have the other party agree to its distribution in the manner you wish, and if you cannot agree on how your spouse will get their share of the home, often the only alternative is to sell. Selling the home is also the course the Court is going to require should your case go to trial. This is a common “bargaining chip” used by the party whose interest is potentially being bought out.
By addressing the possibility of a buyout early on, the appropriate experts – such as real estate appraisers, mortgage professionals, and financial advisors – can be consulted to help us understand if your dreams can be made a reality, and further gives us more time to pitch the perfect package to your spouse. For more information on how you can protect your interests and needs in your divorce as they relate to your real property, schedule a consultation today.