NAPLES, Fla. – Home is where the heart is, but how do you divide an indivisible asset in a divorce? Owning real estate together can quickly complicate what you think will be a “simple” divorce. Here are 10 tips to consider:
1. Title does not control. If the home was purchased during the marriage with marital funds, the property is likely marital property that will be divided as part of a property settlement.
2. It is impossible for a court to divide an indivisible assets, so if the parties can’t agree, then a judge may order the property to be sold.
3. The house can go to one party or the other (and thus not be sold). Then the home’s value will counted in the column of whichever spouse gets it in the overall equitable distribution scheme.
4. If the home has a mortgage there are several other considerations, such as: does one party want to keep the home? Or do the parties want to sell it to pay off the mortgage? If so, is there enough equity in the home to pay off the mortgage? If there is not enough equity in the home, then do the parties want to short sale the home and take that hit on their credit? Are both parties liable for the mortgage? If so, can one party afford to refinance the home (the one who wants to keep the home) and thereby remove liability to the other person?
5. If a couple are just separating but not yet divorcing, then discuss: who is paying for the mortgage, taxes, insurance, utilities, pool, lawn, repairs and maintenance? When considering major repairs, which needs to be defined by a dollar amount, i.e. repairs over $200 or over $1,000, what is the process? Will the paying person be paid back immediately? Or will they receive a “set off” against the net proceeds of the other party’s one-half share at when the property is sold.
6. Sometimes courts will award “exclusive occupancy” of the home to one parent for an extended period after the divorce, if it is determined that maintaining the home is crucial for the stability of the children. In that case, having a specific written plan that is highly detailed is critical.
7. Net proceeds to be divided from the home’s sale should also be specifically defined: what will be deducted from the gross?
8. Remember that title remains the same unless one party quit claims the property to the other, which is how one party will transfer his or her ownership to the other.
9. With regard to taxes, just like with mortgages, even if the parties have an agreement between themselves that one party will be responsible, that will not shield the other from liability if his or her name is still on the property as an owner. Parties should have an agreement as to who is responsible and then include a hold harmless and indemnification clause, which will allow recourse against the defaulting party.
10. Generally, if there is real estate involved, then one party has to refinance and give half the value to the other — or sell it.
For all the reasons I outline here, continuing to co-own property and be on the same mortgage is a bad idea. Someone always ends up on the short end of that deal.
Rebecca Zung, a family law attorney, is a founding partner of the Law Office of Zung Clough, PLLC in Naples. As a renowned divorce authority, she helps clients transform and rebuild their lives. Her book, “Breaking Free: A Step-by-Step Divorce Guide to Emotional, Physical and Spiritual Freedom,” is available on amazon.com. Contact Zung at ZungFamilyLaw.com or email@example.com.