Deferring the Sale of Real Property in Divorce Cases

Deferring the Sale of Real Property in Divorce Cases - Divorce Real Estate Pros

Deferring the Sale of Real Property in Divorce Cases

What You Need to Know

In recent years, the possibility of a real property buyout in divorce cases has become increasingly difficult, reminiscent of the market crash of 2008. The combination of rising interest rates and high home values has created a challenging environment for divorcing homeowners. Recently, the Federal Reserve left interest rates unchanged for the sixth consecutive session, further impacting the feasibility of buyout mortgages.

The Growing Trend of Deferring the Sale

Due to these financial constraints, more divorcing couples are opting to defer the sale of their family home. This trend often involves maintaining joint ownership and joint mortgages with their ex-spouse. While this approach may seem beneficial, especially for families with children who wish to remain in the family home, it comes with significant risks that must be carefully considered said our South Bay Family Law Attorney

Joint Title Risks

  1. Liens or Judgments: Creditors can encumber real property owned jointly. Debts from one spouse could force a sale or significantly reduce the property’s equity.
  1. Bankruptcy: If either party files for bankruptcy, including the property in the proceedings can complicate its sale or refinancing.
  1. Liability: Titled homeowners face liabilities, from accidents on the property to potential legal issues. For instance, if a friend’s child drowns in a pool or a tree damages a neighbor’s property, the titled homeowner could be dragged into a lawsuit.
  1. Encumbering the Property: Either owner could use the property as collateral for debts, ranging from gambling debts to business loans.
  1. Leases: If the property is leased or has roommates, tenant rights could complicate its sale.
  1. Incapacitation: Without a property Power of Attorney, disposing of the asset becomes complex and delayed if a titled homeowner becomes incapacitated.
  1. Death: The death of a titled homeowner can create complex ownership issues, potentially involving heirs, state laws, and the need for probate.

Joint Mortgage Risks

  1. Credit Damage: Any default on the mortgage, such as late payments, loan modifications, or foreclosure, affects all parties on the mortgage. This can have severe credit implications, especially if one party is looking to purchase a new home.
  1. Deficiency Judgments: In the event of foreclosure, deficiency judgments can haunt an uninformed out-spouse, depending on loan structure and state statutes.

Practical Advice for Clients

When clients wish to defer the sale of their home, it is crucial to disclose the associated risks. They should maintain close communication with the mortgage company to ensure timely payments and regularly monitor their credit report. Additionally, clarity in post-judgment property listings is essential to avoid vague terms and potential disputes. Specificity regarding buyout timelines, listing agent selection, responsibilities for property upkeep, and proceeds division can prevent costly issues and delays said our South Bay Family Law Attorney.

Final Thoughts

Navigating the complexities of joint property ownership and joint mortgages during a divorce requires careful consideration and proactive management. If you or your clients have any questions or need further information, please do not hesitate to contact me.

Until next time!

Are you getting divorced and need a South Bay Divorce Real Estate Pro? Contact Tina Kaminsky  today at 310-873-8462 and consider it done.