Divorce Complicates the Transfer of the Marital Home in a Shaky Real Estate Market
Tampa, Fla. – In these tough economic times, the question of who gets the marital home in a divorce is complicated.
Many homes that were bought during the booming real estate market are not worth what they were bought for, leaving negative equity. Added to that is the fact that the person getting the home may not have enough income to pay the mortgage solo or refinance it into their name alone. Sometimes banks allow a spouse to “assume” the mortgage, but they will still be cautious about an individual’s financial history. With few attractive options, many spouses wonder what could be the harm in remaining on the mortgage after the divorce. While this may be the only solution at the time, it leaves the party who doesn’t get the house on the hook, and may prevent them from purchasing another home.
Many Florida divorce cases are resolved through a marital settlement agreement, known as the MSA. Each party sets the terms and conditions for the division of assets and liabilities, including the disposition of the marital home. It is important to include language to provide for future transfer of financial responsibility, if not feasible now.
The parties will come to an agreement of who retains the interest and ownership of the marital home. The spouse who keeps the home agrees to be responsible for all obligations and liabilities associated with the property and the other soon-to-be ex will be relieved from these debts. This hold harmless clause includes any and all mortgages, property taxes, insurance, utilities, HOA dues, and lines of credit associated with the home.
“A Tampa divorce attorney will go over the risk involved if the MSA is written with both spouses still on the mortgage,” said Marcie Baker, divorce attorney at Alston & Baker, P.A. in Zephyrhills and Tampa, Fla. “Your divorce and MSA will not bar a creditor or third party lender from seeking legal action if a former spouse defaults on his or her responsibility.”
Lenders can seek damages against both individuals that could lead to extensive credit and financial issues. So if there is any possibility to refinance or assume the mortgage so that only one spouse remains financially responsible, it is to everyone’s benefit.
“There are many documents to exchange, so it is crucial to have a competent attorney to prepare the paperwork, including a quitclaim deed, to expedite the process,” said Baker, who has more than eight years of experience with divorce and family law in the Tampa and Zephyrhills area.